At Sierra Cables, providing excellence has · At Sierra Cables, providing excellence has always been our top goal. We take pride in our ability to continuously raise the bar in our

At Sierra Cables, providing excellence has always been our top goal. We take pride in our

ability to continuously raise the bar in our standards of excellence. Having conquered the local market by gaining

recognition of being a veritable powerhouse in the local cable industry, we have once again performed beyond expectations

by benchmarking ourselves against global standards.

Our overseas reach built up throughout the years has now become recognized and distinguished globally for its high standards of quality and performance excellence. This has

in turn helped us become one of the foremost cable manufacturers in Sri Lanka with an outstanding

international presence.

CONTENT

ABOUT US

Cover Story 01

Company Vision, Mission & Values 06

About This Report 08

Our Commitment to Excellence 09

Financial Highlights (Group) 10

About Us 11

The Chairman’s Review 12

Managing Directors' Review 14

The Board of Directors 16

Operational Review 20

Our Product Portfolio 24

Sustainability Review 26

HR Review 28

Risk Management Review 31

IT Review 34

Corporate Governance 35

Audit Committee Report 47

Board Compensation and Rumeration Committee Report 49

Related Party Transaction Committee Report 50

Statement of Directors’ Responsibilities 51

Annual Report of the Board of Directorson the A�airs of the Company 52

MANAGEMENTDISCUSSION &

ANALYSIS

Independent Auditors' Report 61

Income Statement 62

Statement of Profit or Loss and Other Comprehensive Income 63

Statement of Financial Position 64

Consolidated Statement of Changes in Equity 66

Statement of Changes in Equity 67

Statement of Cash Flow 68

Notes to the Financial Statemements 70

10 Year Summery 114

Quarterly Performance 115

Notice of Meeting 116

Form of Proxy 117

Corporate Information 119SUPPLIMENTARY

INFORMATION

FINANCIALSTATEMENTS

CONTENT

ABOUT US

Cover Story 01

Company Vision, Mission & Values 06

About This Report 08

Our Commitment to Excellence 09

Financial Highlights (Group) 10

About Us 11

The Chairman’s Review 12

Managing Directors' Review 14

The Board of Directors 16

Operational Review 20

Our Product Portfolio 24

Sustainability Review 26

HR Review 28

Risk Management Review 31

IT Review 34

Corporate Governance 35

Audit Committee Report 47

Board Compensation and Rumeration Committee Report 49

Related Party Transaction Committee Report 50

Statement of Directors’ Responsibilities 51

Annual Report of the Board of Directorson the A�airs of the Company 52

MANAGEMENTDISCUSSION &

ANALYSIS

Independent Auditors' Report 61

Income Statement 62

Statement of Profit or Loss and Other Comprehensive Income 63

Statement of Financial Position 64

Consolidated Statement of Changes in Equity 66

Statement of Changes in Equity 67

Statement of Cash Flow 68

Notes to the Financial Statemements 70

10 Year Summery 114

Quarterly Performance 115

Notice of Meeting 116

Form of Proxy 117

Corporate Information 119SUPPLIMENTARY

INFORMATION

FINANCIALSTATEMENTS

Sierra Cables PLCAnnual Report 2016 / 2017

6

Vision

Mission

Being the bridge in energizing the community.

Achieve a continuous growth to enhance the stakeholders’ value while offering a high quality product.

Become a reputed organization by promoting sustainable development.

Uplift the living standards of Sierra Cables family.

Company Vision & Mission


7

ValuesAs a responsible and ethical corporate citizen, Sierra Cables PLC carries out its affairs based on a set of values. Every member of the Sierra Cables family is committed to follow them.

ProductivityAs a manufacturer, we always try to take the maximum output from resources without exploiting them.

IntegrityWe believe in truth, justice and fair play together with professionalism above everything.

PassionWe will embrace challenges with passion and aggressively pursue our goals to reach the pinnacle.

ServiceWe always strive for excellence in serving our customers and making sure that the service provided is at the required level.

QualityWe are committed to produce the highest quality products for our customers.


8

About This Report

Sierra Cables PLC formulates its strategy and manages its

business in an integrated manner, taking full cognizance

of the requirements of its diverse stakeholders and

capital resources. In complementing our integrated

thinking, we adopt a similar approach towards corporate

reporting and through this Annual Report strive to

present a balanced and cohesive assessment of the

Company’s strategy, performance and outlook in relation

to our economic, social and environmental goals.

Scope and Boundary

This report covers Sierra Cables’ operations for the

period from 01 April 2016 to 31 March 2017. Financial

and non-financial information pertaining to material

developments and issues that shaped the Company’s

performance during the reporting period are discussed

comprehensively. Material aspects included in the Report

were selected through a systematic and comprehensive

process which involved robust stakeholder engagement

at all levels.

Reporting Principles

This integrated report conforms to the requirements of

several mandatory and voluntary frameworks including

the Sri Lanka Financial Reporting Standards, Companies

Act No. 7 of 2007, Listing Rules of the Colombo

Stock Exchange, Code of Best Practice on Corporate

Governance issued jointly by the Institute of Chartered

Accountants of Sri Lanka and the Securities and

Exchange Commission of Sri Lanka.

Third Party Assurance and Verification

We believe that third party assurance is vital in

establishing credibility and transparency of our Report.

We have engaged Messrs KPMG, Chartered Accountants

to provide assurance on the financial statements in this

report and the supplementary notes.

This Report covers Sierra Cables’ operations for the period from 01 April 2016 to 31 March 2017. Financial and non-financial information pertaining to material developments and issues that shaped the Company’s performance during the reporting period are discussed comprehensively.


9

Our Commitment to Excellence

As one of the most foremost cable manufactures in the

country, Sierra Cables PLC is a leading expert in the field

of electric power, whose performance and production

excellence has received many accolades and awards over

the years. These awards help to highlight the superiority

of the products along with our outstanding performance

which has proved to be consistent throughout, making

the organization one of the undisputed forerunners in

the race.

These awards showcases the recognition received on

local as well as international arenas, along with other

government and private organizations. This further

encourages us to aim higher, raising the goals to bring

local performance to global standards.

UDC Best Cable Manufacture of the YearThe UDC Business Awards 2011 was an international

awards program which recognized the success and

innovation of business leaders and organizations. UDC

Business Awards honors businesses

and industry leaders through

the acknowledgment of

innovative business processes,

product development,

sustainability and overall

business success.

IESL Engineering Excellence AwardSierra Cables was recognized by the

Institute of Engineers of

Sri Lanka by awarding

“Excellence in Engineering” in

2011 for the manufacturing

section. This is in recognition

of the performance excellence

in the manufacturing sector of the

cables over three decades in Sri Lankan cable industry.

Sri Lanka Malaysia Business AwardsSierra Cables was the proud winner

of the 6th annual Sri Lanka-

Malaysia Business Gold Award

2010 in the open category for

the contribution made to the

growth of economy.

CNCI Achiever of Industrial Excellence Merit Awards

Sierra Cables was a Merit award winner

in CNCI Achiever of Industrial

Excellence in 2010 for excellence

in the industrial sector and for

enhanced quality standards,

productivity, employee benefits,

about relations and adherence to

statutory requirements.

Quality Crown AwardSierra Cables is proud to pronounce

that, “we won the challenge”.

Beyond local boundaries we

have been able to excel the

class of international quality

standards. This award is

based on QC100 TQM mode,

developed by Business Initiative

Directions in collaboration with a highly qualified team

of professionals regarding the total quality management

system of an organization.

Global Green Mark CertificateSierra Cables PLC was awarded the

CIOB (Ceylon Institute of Builders)

Green Mark Certificate Silver

award for the product category

of electric cables in December

2015.

10

Financial Highlights (Group) About Us

1,000

0

2015 2016 2017

3,4823,036

4,061

2,000

3,000

4,000

Group TurnoverMillions

(Rs.)

5,000

1.00

0

2015 2016 2017

2.702.88

3.10

2.00

3.00

Net Asset per Share(Rs.)

4.00

0.10

0

2015 2016 2017

0.49

0.37

0.48

0.20

0.30

0.40

0.50

EPS(Rs.)

0.60

0.05

0

2015 2016 2017

0.20 0.20

0.25

0.10

0.15

0.20

0.25

DPS(Rs.)

0.30

2015 2016 2017

Gross ProfitMillions

(Rs.)

741

630

878

200

0

400

600

800

1,000

2015 2016 2017

Net ProfitMillions

(Rs.)

50

0

100

150

200

250

300

250

193

249

DividendPayments

25%

Sierra Cables East Africa Ltd.

Sierra Industries (Pvt) Ltd.T & G Lanka (Pvt) Ltd.

Tea Leaf Resort Holdings (Pvt) Ltd.

Subsidiaries &

Associates

Purity of our input Copper Sourced only

through imports

99.9%

Direct Employment

Generated

500+

Countries Product Reach

15+

Years of operations in

Sri Lanka

38

Market Capitalization

as at 31st March 2017

Rs.1,613

Mn

Indirect Employment, International

Presence

2000+

Financial Year ended 31st March2017

RS.2016

RS.

Net Turnover 4,044,449,473 3,036,010,858

Profit Before Tax 347,668,990 273,428,180

Profit After Tax 263,479,044 193,103,960

Shareholders’ Funds 1,676,847,403 1,546,612,947

Issued & Fully Paid Number of Shares 537,512,430 537,512,430

Total Assets 4,416,034,134 3,260,001,870

Market Capitalization (Million) 1,613 1,800

Dividend Payout Ratio (%) 52.08 54.05

Current Ratio 1.25 1.40

Return on Capital Employed (ROCE) (%) 26 20

Per (LKR)

Market Value 3.00 2.90

Earnings 0.48 0.37

Dividends 0.25 0.20

Net Assets 3.10 2.88

11

Financial Highlights (Group) About Us

1,000

0

2015 2016 2017

3,4823,036

4,061

2,000

3,000

4,000

Group TurnoverMillions

(Rs.)

5,000

1.00

0

2015 2016 2017

2.702.88

3.10

2.00

3.00

Net Asset per Share(Rs.)

4.00

0.10

0

2015 2016 2017

0.49

0.37

0.48

0.20

0.30

0.40

0.50

EPS(Rs.)

0.60

0.05

0

2015 2016 2017

0.20 0.20

0.25

0.10

0.15

0.20

0.25

DPS(Rs.)

0.30

2015 2016 2017

Gross ProfitMillions

(Rs.)

741

630

878

200

0

400

600

800

1,000

2015 2016 2017

Net ProfitMillions

(Rs.)

50

0

100

150

200

250

300

250

193

249

DividendPayments

25%

Sierra Cables East Africa Ltd.

Sierra Industries (Pvt) Ltd.T & G Lanka (Pvt) Ltd.

Tea Leaf Resort Holdings (Pvt) Ltd.

Subsidiaries &

Associates

Purity of our input Copper Sourced only

through imports

99.9%

Direct Employment

Generated

500+

Countries Product Reach

15+

Years of operations in

Sri Lanka

38

Market Capitalization

as at 31st March 2017

Rs.1,613

Mn

Indirect Employment, International

Presence

2000+

Sierra Cables PLC is one of the leading and prestigious

corporates in the business of manufacturing Electric

Power Cables in Sri Lanka. With over 30 years of industry

presence, today we are a front runner in manufacturing,

marketing and distributing Copper and Aluminum cable

products locally and across number of international

markets. Today we have surpassed the 4 billion rupee

turnover level as a result of the trust placed on our

products and services by our valued customers. The

Quality, Sustainability and Responsibility that we placed

on our undertakings are renowned with ISO 9001, ISO

14001, OHSAS 18001 as well as SLS certifications to

name a few. We work closely with our strong distribution

channel agents across the island covering all the

regions, maintain virtuous partnerships with private and

government project owners as well as our international

agents. As a public quoted company, our policy is to

generate maximum value for our shareholders, hence

we are proud to have the distinction as the only cable

manufacturer in Sri Lanka to operate a manufacturing

plant overseas through our landmark investments in East

Africa and Fiji.


12

The Chairman’s MessageIt is with great pleasure that I present the Annual Report

and Financial Statements for the year ended 31st

March 2017. The year under review was a strategically

significant time for Sierra Cables as we took several

key steps on our new strategic direction of exploring

the export market and taking the Sri Lankan Cable

manufacturing industry to the global stage. In short,

Sierra Cables has already commenced laying the

groundwork through increased network expansion and

investments to become a global player.

Let us first take a look at our operating environment. The

Sri Lankan economy grew at a slower rate of 4.4 per cent

in 2016 in real terms, in comparison to 4.8 per cent in the

previous year, largely due to volatile weather conditions

that affected the agricultural sector. The industry related

activities however recorded a notable growth of 6.7

per cent year on year largely driven by the boom in the

construction, mining and quarrying subsectors. In 2016,

the construction sector grew by 14.9 per cent as a direct

outcome of the increase in the residential and mixed

development boom.

In this context, Sierra Cables recoded a commendable

overall revenue growth of 30 per cent. The Group’s core

business segment, government contracts, grew by 42

per cent during the period under review while the export

market indicated a rapid growth of over 300 per cent.

Consequently overall revenue at Group level increased to

33 per cent from Rs. 3.4 billion in the previous financial

year.

The Company’s profit after tax grew by 34 per cent to

Rs. 235 million from Rs 175 million in the previous

financial year. At the Group level profit after taxation

grew by 35 per cent to Rs 261 million in comparison

to the Rs. 193.10 million recorded the year before. As a

result of increased profitability, this year we were able to

increase our dividend payments to Rs. 134 million

in total when compared to the total dividend

payment of Rs. 107 million posted in the

previous financial year.

Strategic Direction

During the year under review Sierra Cables took several

strategic steps to strengthen our position as a resilient

and a profitable business with vested interest in exploring

the export market and enhancing the existing local

market position. In line with our growth strategies,

this year we ventured into three joint agreements with

three Fijian companies to start a USD 4 million power

cable manufacturing plant in the Pacific island nation.

This investment will enable Sierra Cables to tap the

cable markets in New Zealand, Australia and Papua

New Guinea. Our previous venture into the East African

market through a manufacturing plant in Kenya has

already delivered positive results in terms of tenders

and market growth. In preparation to cater to the

growing export market, we have already taken steps to

obtain international standard certifications such as the

International Conformity Report from the Singaporean

Standardization Institute.

As a relatively new entrant to the export market, we

foresee challenges in terms of managing exchange

rate risk given the fluctuating currency exchange rates.

Nevertheless, we will continue to view foreign investment

opportunities prudently and consider those based on the

value it would bring to our core proposition.

Sierra Cables took several strategic steps

to strengthen our position

as a resilient and a profitable business with vested interest in exploring the export market and enhancing the existing local

market position.


13

Sustainable Growth

In order to support our growth strategy to maintain a

futuristic and long-term vision, we continue to invest in

certain resources, specifically technology, infrastructure

and people, which will contribute to enhance the

scalability of our business and allow us to become a more

sustainable entity.

Our sustainability agenda focuses on efficient production

methods to maintain our profitability and competitive

position while striving for minimal environmental impact.

Our wastage mitigation measures include recycling of

Copper, Aluminum and PVC as well as stringent and

responsible methodologies to manage our electric

waste without harming the environment. We maintain a

carefully monitored supply chain process to maximize the

use of wooden drums used to transport cables and have

already implemented measures to replace these wooden

drums with steel drums which affords a lengthier period

of usage.

Sierra Cables is committed to investing in our people to

pave the way for business growth that coincides with

human capital growth. We provide essential training both

locally and at international levels to our employees, while

providing them timely rewards and remunerations. Our

human capital growth strategy focuses on selecting the

right talent for the industry and assisting their growth

through a streamlined development process.

Growth Prospects

In the near future, Sierra Cables will face positive growth

prospects given the sheer number of state and private

sector construction projects scheduled to commence

in the latter part of 2017 and early 2018. The proposed

megapolis project will usher in an era of rapid growth

in the construction industry aided by the emerging

private construction projects as well as various state

infrastructure development projects.

The government’s export-oriented industrialization

strategy augurs well for our own export strategy.

According to the Central Bank of Sri Lanka the economy

is expected to grow at an increased rate of 4.5 per cent

in the year 2018. Positive economic growth will directly

impact our own growth through increased opportunities

for business expansion.

In the near future, Sierra Cables will invest further Rs. 120

million in additional storage facilities to meet expected

export and local demand.

Appreciation

I would like to express my sincere appreciation of

the contribution made by several parties this year. I

am grateful to the contribution of my colleagues in

the Board for their guidance, insight and support at

Board deliberations. I am extremely thankful to the

management team led by the Managing Director. I would

also like to express my sincere gratitude to our customers,

bankers, business partners and all other stakeholders for

the trust they have placed in us. Last but not least, my

sincere gratitude to our shareholders for their continued

support. We are committed to enhancing your value

in this Company and look forward to your unwavering

support in our future endeavours.

Priyantha Perera

Chairman

Colombo

11th August 2017


14

Managing Director's StatementDespite slow overall economic growth, increased

investment expenditure, especially in the construction

sector, drove the economic growth during the year under

review. The country’s industry related activities grew

notably recording a growth rate of 6.7 per cent partly

driven by increased activity in the construction industry

which grew by 14.9 per cent. Gross domestic capital

formation which represents the level of investment

activity grew by 19.6 per cent mainly driven by the

expansion of construction activities in 2016. However

given the volatile weather conditions and lackluster global

economy, the Sri Lankan economy indicated a downward

trend.

Industry Activity

During the year under review, the construction industry

in Sri Lanka gained momentum providing power cable

manufacturers opportunities for business growth. A

number of private entities invested in the construction

of apartment complexes while the state projects focused

on development of the transport system and roadways,

energy and water resources. Low interest rate regime

and the declining prices of copper, aluminum and plastics

globally added to demand in the cable industry and

enabled local cable manufacturing companies to increase

profitability.

In this backdrop, as the third largest power cable

manufacturer, Sierra Cables garnered increased

profitability during the year under review. Nevertheless,

augmented competition and price wars affected overall

industry profitability.

Operational Highlights

During the year under review, Sierra Cables recorded a

steady growth in revenue in the core market segments

including government tenders as well as a rapid rise

in export revenue. This year, we were one of the

main contributors to the national level electrification

programme as a key supplier to the Central Electricity

Board. In 2016, Sierra Cables supplied the entire cable

requirements of the high end ‘Shangri-La Hambantota’

project and secured an order to cater to the cable

requirements of the ’Iconic Development’ project in

Rajagiriya.

Our strategic focus in the year 2016 rested principally

on developing the export market. Following the success

of our venture into the East African market via the

investment of USD 2 million on a power transmission

cable manufacturing plant in Nairobi, Kenya, this year, we

ventured into Fiji. The joint venture that we entered into

with three Fijian companies helped fund the set - up of

a power cable plant in Fiji giving us access to the nearby

markets, namely Australia, New Zealand and Papua New

Guinea.

In 2016, Sierra Cables East Africa Limited (SCEAL), the

Group’s first ever overseas venture secured the first order

from the country’s Urban Electricity Company. Both

SCEAL and the recently initiated plant in Fiji are expected

to show considerable performance growth in the near

future.

Group revenue for the year increased by 33 per cent

posting Rs. 4.04 billion in comparison to the Rs. 3.03

billion recorded in the previous financial year. In 2016,

Sierra Cables posted a PBT (Profit Before Tax) of Rs. 347

million at the Group level in comparison to the Rs. 255

million recorded in the previous financial year.


15

Sharpening the Focus on Growth

As the first ever Sri Lankan power cable manufacturer

to venture overseas, we have already envisioned a clear

growth strategy to succeed in the export market as

well as the local market. We have already implemented

practical measures to ensure sustainable growth driven

by increased efficiency of operations, adoption of

innovative technologies, a strengthened IT platform as

well as an effective environmental policy framework. We

will continue to maintain international quality standards

and sustainability practices in order to foster viable and

long-term growth.

In the long term, we foresee immense potential for

growth in the African region as the region itself is geared

to increase their energy requirements. We will continue

to work towards enhancing growth and increased

profitability in all areas of operation to create value for all

our stakeholders.

Appreciation

I wish to convey my sincere gratitude to our Chairman

and members of the Board for their guidance and

unwavering support. My sincere appreciation goes to

Sierra Cables staff for their valuable contribution and

commitment. I also wish to express my gratitude to

our customers, dealers, suppliers, bankers’ and all other

stakeholders for their continued faith in us.

D. Shamendra Panditha

Managing Director

Colombo

11th August 2017

Our strategic focus in the year

2016 rested principally on developing the

export market, following the success of our

venture into the East African market in

Kenya.


16

The Board of Directors

W.A.P. Perera

Chairman

Mr. W.A.P. Perera is the founder Director of Sierra

Construction (Private) Limited and serves as the

Chairman of Sierra Cables PLC. He has over 37 years of

experience in the construction industry.

D.S. Panditha

MD & Chief Executive Officer

Mr. D.S. Panditha is the Managing Director and Chief

Executive Officer of Sierra Cables PLC. He is a member

of both the Institute of Incorporated Engineers and

the Institute of Marketing (SL). He has over 40 years of

experience in the cable and plastic industry.

J.H.P. Ratnayeke

Mr. J.H.P. Ratnayeke is a Senior Corporate Lawyer who is

also the precedent partner of Paul Ratnayeke Associates,

a leading law firm in Sri Lanka which he founded in

1987 handling all areas of law and International Legal

Consultancy work.

Mr. Ratnayeke is a Solicitor of England and Wales

and an Attorney-at-Law of the Supreme Court of Sri

Lanka. He has been awarded a Masters Degree in Law

by the University of London. Currently, Mr. Ratnayeke

holds directorships in 62 Companies of which 08 are

Public Quoted Companies. He has also been elected /

appointed as Chairman / Deputy Chairman to several of

these companies. He is also Chairman of P.R. Secretarial

Services (Pvt) Ltd.

G.S.M. Irugalbandara

Ms. G.S.M. Irugalbandara was the Director of Alucop

Cables for five years. She has an MBA from the University

of South Queensland. She has been attached to KPMG

as a Tax Manager prior to joining Alucop Cables. She now

serves as a Non-Executive Director at Sierra Cables PLC.

Prof. A.K.W. Jayawardane

Prof. A.K.W. Jayawardane is the Vice-Chancellor and

Senior Professor in Civil Engineering, University of

Moratuwa. He is an administrator, an academic, a

researcher and a consultant with experience and

expertise in university leadership, teaching, research

and consultancy in the broad areas of construction

management, project management, technology

management and entrepreneurship.

He has a BSc Eng in Civil Engineering with first class

honors, University of Moratuwa, MSc in Construction,

Loughborough University of Technology, United Kingdom

and a PhD from the same University. He is a Past

President and a Fellow of the Institution of Engineers,

Sri Lanka, a Fellow of National Academy of Sciences Sri

Lanka, a Fellow of Institute of Project Managers and a

founding member of the Society of Structural Engineers

Sri Lanka. He is also a board member of several private

and public institutions.

E.A.D.T.B. Perera

Mr. E.A.D.T.B. Perera is a founder Director of Sierra

Construction (Private) Limited with 36 years of

experience in the construction industry.


17

Eng. B.W.N. Rupasinghe

Mr. B.W.N. Rupasinghe is an electrical & electronics

engineer by profession with a BSc in Electrical &

Electronics from Peradeniya. He is having an MSc

Degree in electrical power transmission and distribution

from University of Manchester Institute of Science &

Technology, UK and a MA Degree in Economics. He was

the former General Manager of Central Engineering and

Consultancy Bureau.

S.N. Lokuge

Ms. S.N. Lokuge holds the place as a Non-Executive

Director in the Board of Directors. She is currently

reading for her Masters in International Business (Deakin

University) whereas she has earned her Bachelors of

Commerce degree in Management from Swinburne

University of Technology in Australia. She is also

the holder of the Graduate Certificate in Business

Administration from the Swinburne University of

Technology.

In addition, she serves as a Director for the International

Tertiary Education Campus (INTEC) Asia, Director, NNL

Holdings Pvt. Ltd, Deputy CEO, Sierra Construction “Road

Division”, Alternative Director for Sierra Construction,

Alternative Director for Sierra Holdings, and as Director of

Sansun Boutique Hotel Limited.

M.N. Gunasekara

Mr. M.N. Gunasekera was a former Chief Executive

Officer / Director of Shaw Wallace & Hedges PLC, and

its Subsidiary and Associate Companies. He counts

approximately 41 years of work experience, out of which,

34 years have been with the Shaw Wallace Group and 12

years as their Chief Executive Officer. He has extensive

experience in the total finance function and legal matters,

specializing in taxation and overall general management.

He was a former Council Member and President of the Sri

Lanka Institute of Taxation. He is a Fellow of the Institute

of Chartered Accountants of Sri Lanka, Fellow of the

Institute of Certified Management Accountants of Sri

Lanka and Fellow of the Sri Lanka Institute of Taxation.

He has followed a Management Development Program at

the Cranfield School of Management, Bedford, England.

Annual Report 2016 / 2017

20

Sierra Cables PLC

Operational Review

Global Economic Outlook

The World Economic Outlook prepared by the

International Monetary Fund (IMF) revealed that while

developed economies registered strong performances in

the second half of the year 2016 that led to a momentum

gain in the global economy, emerging economies on the

other hand registered a lackluster performance. Political

changes in the US and UK created uncertainties in the

financial market as well as the global economic outlook.

Oil producing economies showed signs of improvement

with the stabilizing of oil prices during the second half of

the year.

As predicted global economic activity is on the rise with a

cyclical recovery in investment, manufacturing, and trade.

The global economic growth rate is expected to increase

from 3.1% in 2016 to 3.5% in 2017 with further growth

opportunities expected in 2018.

Global Activity Indicators

The IMF further revealed a considerable growth in global

economic activity in the fourth quarter of 2016 with

manufacturing PMIs and consumer confidence indicating

a positive turn in advanced economies. In emerging

economies economic activity showed a modest growth.

Figure 1.1. Global Activity Indicators

Global economic activity gained momentum in the fourth

quarter of 2016. Manufacturing PMIs and consumer

confidence increased noticeably in advanced economies

in the last few months of 2016 and early 2017. They also

recovered to a more modest extent in emerging market

economies.

-10

-5

0

5

10

15

20

–4

0

2

4

6

8

2011 12 13 14 15 16 Feb. 2017

Manufacturing PMI (deviations from 50; right scale)

Industrial production

World trade volumes

1. World Trade, Industrial Production, and Manufacturing PMI (Three month moving average; annualized percent change unless noted otherwise

-2

-4

-2

0

2

4

6

8

10

12

14

2012 13 14 15 16Feb. 2017 2017

90

95

100

105

110

115

120

125

130

2012 13 14 15 16Feb.

Advanced economies1

World

2. Manufacturing PMI(Three month moving average; deviations from 50)

Emerging market economies2 Advanced economies1

3. Consumer Confidence(Index, 2010 = 100)

Emerging market economies2

0

1

2

3

4

2011:H1

13:H1

15:H1

17:H1

18:H2

October 2016 WEO April 2017 WEO

3

4

5

6

7

8

9

2011:H1

13:H1

15:H1

17:H1

18:H2

GDP Growth(Annualized semiannual percent change)

4. Advanced Economies 5. Emerging Market and Developing Economies

The Following Charts are Sourced From :CPB Netherlands Bureau for Economic Policy Analysis; Haver Analytics; Markit Economics; and IMF staff estimates.

Note: CC = consumer confidence; PMI = purchasing managers index.

1Australia, Canada (PMI only), Czech Republic, Denmark, euro area, Hong Kong SAR (CC only), Israel, Japan, Korea, New Zealand (PMI only), Norway (CC only), Singapore (PMI only), Sweden (CC only), Switzerland, Taiwan Province of China, United Kingdom, United States.

Argentina (CC only), Brazil, China, Colombia (CC only), Hungary, India (PMI only),

Indonesia, Latvia (CC only), Malaysia (PMI only), Mexico (PMI only), Philippines (CC only), Poland, Russia, South Africa, Thailand (CC only), Turkey, Ukraine (CC only).


21

Sierra Cables PLC

However, preservation of global economic expansion will

require a framework that avoids protectionist measures

as well as a mechanism to distribute the gains widely.

Surpassing global economic challenges require collective

action by individual countries as well as multilateral

cooperation. These actions include efforts to preserve

open trading systems, preserving global financial stability,

establishing equitable tax systems, continued support

towards emerging economies to pursue development

goals and adapting strict climate change measures to

improve sustainability.

Sri Lankan Economy

Due to volatile weather conditions and slow global

economic recovery, the Sri Lankan economy grew at a

4.4% growth rate in real terms in comparison to 4.8%

rate recorded during the previous year. However, the

economy indicated signs of stabilization largely driven by

corrective steps taken by the government and the Central

Bank. Inflation remained low during the first quarter

of the year 2016 but continued to rise during the year

recording an annual average of 4.0% in 2016. The Central

Bank attributes the high level of inflation in 2016 and

the first quarter of 2017 to adverse weather conditions

that the country experienced, tax adjustments as well as

increasing international commodity prices.

Industry related activities expanded to 6.7% in

comparison to the 2.1% recorded in the previous year.

Construction recorded a healthy growth of 14.9% along

with growth in mining and quarrying; manufacture of

rubber and plastic products; manufacture of basic metals

and fabricated metal products.

The government continued to support the industry

sector in line with its export-oriented industrialization

strategy. The Sri Lankan government also continues to

implement measures to establish the Sri Lankan economy

as an export driven economic hub through expansion of

technological support, promoting investment and the

provision of infrastructure facilities.

In spite of the negative impact of adverse weather

conditions and inflation growth, the Sri Lankan economy

is expected to reach a moderate growth rate of 5% in

the year 2017 and record an annual growth rate of 7%

by 2020. The Central Bank reveals that the private sector

is expected to contribute to achieving a higher growth

rate by leveraging potential growth opportunities in the

economy as well as external markets.

Domestic production is expected to improve through

better trade linkage, reinstating of GSP+ concession as

well as proposed trade and economic partnerships within

the region. Imports too would continue to rise as a result

of the increase in higher intermediate goods imports,

rising global oil prices and particularly an increased

demand for investment goods in view of increased

investment expenditure.

Performance Summary

During 2016, the growth in the construction industry

including urban dwellings, energy and water resources,

mixed developments, hotels and similar projects boosted

demand for the entire cable industry. Declining prices

of copper, aluminum and plastics globally added to the

demand as well. During the year under review, Sierra

Cables maintained a strong market position as the

third largest manufacturer of power cables in Sri Lanka

and leveraged on the market opportunities to boost

profitability.

While the demand from the government sector through

tenders remained the largest contributor to Sierra Cables

profit growth, the dealer market too continued to have

a positive impact on the Company’s growth as well. In

2016, Sierra Cables played a key role in the national level

electrification programme as a key supplier to the Central

Electricity Board.


22

Sierra Cables PLC

The institutional or the project sector contributed to

the company’s revenue generation. However, in line with

our focus on leveraging the international market, we

succeeded in expanding our export market during the

year under review to record an export gain that exceeds

437 Mn. LKR.

Our strategic steps to build cordial relations with industry

players and our concrete efforts to increase product

quality through obtaining standard certifications from

relevant markets contributed to our success in the export

market. Currently, Sierra Cables is the only Sri Lankan

Cable manufacturer to have established subsidiary

operations overseas with offices in Kenya and Fiji.

Following the success of our venture into the East African

market with the establishment of a manufacturing

plant in Kenya in 2015, this year we entered into a joint

venture with three Fijian companies to tap the markets in

Australia, New Zealand and Papua New Guinea.

Business Development

Sierra Cables communication platforms and tools are

multi-pronged and varied. While our main focus remains

on striving for excellence in manufacturing, safety

standards and customer service, we utilize various tools

to communicate with our existing and potential customer

base.

Awareness and Educational Programmes

During the year under review Sierra Cables conducted

informative seminars targeting electricians in various

regions in Sri Lanka. Conducted by the engineering

professional attached to Sierra Cables as well as

instructors from renowned Technical Colleges, the

seminars conveyed key information about the latest

developments in the industry as well as technical

guidance in cable installation and maintenance.

Jaffna District Electrician Club Seminar

Jaffna International Trade Fair

Operational Review Contd.


23

Sierra Cables PLC

Kurunegala District Electrician Club Seminar

The programmes are organized and implemented by

Sales Professionals with the guidance of respective Area

Sales Managers in each region.

Print and Electronic Media and Digital Campaigns

We conduct timely advertising and public relations

campaigns using both print and electronic media

platforms. Several media campaigns were successfully

carried out during the year supported by a media buying

strategy and media monitoring. Our marketing and IT

departments work together to maintain an engaged

digital presence through timely updates on social media

platforms and utilize the Sierra corporate website to

communicate new developments with all stakeholders.

Sierra Cables Product Catalog and Profile

During the year under review, we compiled a

comprehensive product catalog and a profile with

detailed information such as product certifications, a list

of raw material suppliers, test reports as well as examples

of previous projects.

International Standards and Approval to Increase Demand

In recently times Sierra Cables obtained the

manufacturing approval for our products from the

Maldivian Energy Authority which had a considerable

positive impact on our export growth. In 2016, we

obtained an International Conformity Report from TÜV

SÜD PSB, Singapore, known for premium quality, safety

and sustainability certifications world wide.

This enables Sierra Cables to further enhance our

reputation and positioning as an entity that complies

with international manufacturing standards.


24

Sierra Cables PLC

Our Product Portfolio

Telecommunication CablesPVC insulated, self-supporting

one-pair drop wire and

polyethylene insulated

copper conductors used

as telecommunication

distribution cables. The cables

are manufactured according to

BS 3573 and SLT standards.

Single and Multi-Core Unarmoured CablesSingle and Multi-core unarmoured

cables are solid or stranded

copper conductors with PVC

insulation and sheathing that

comes with voltage rating

of 300/500v, 450/750v. This

type of cables can be utilized

for in-house wiring in distribution

of electricity within buildings and factories. The

cables are manufactured according to BS 3573 and SLT

standards.

Aluminium / PVC CablesThese are PVC insulated

aluminum service main-wire

cables with a voltage rating

of 300/500v. Single-core,

twin and flat-twin cables are

manufactured to BS 6004 and

CEB specifications.

Control CablesControl Cables with copper

conductors are incorporated

with PVC insulation and

sheathing or with PVC

insulation and sheathing and

added steel wire armouring.

These are manufactured according to BS 6346

specifications with a voltage rating of 600/1000v and can

be utilized for transmissions to control units in industry,

railways, traffic signals, thermal power and hydro power

systems.

Aerial Bundle ConductorsSelf-supporting insulated cables

are used for low-voltage

electricity distribution. These

comprise of three phase

conductors (aluminium) and

a neutral conductor (alloy

aluminum) bundled together

with or without street lamp wires.

The neutral conductor also acts as a messenger or a load

bearer. The cables are manufactured to the National

French Standard NFC 33:209.

Aluminium Conductors (AAC & ACSR)All Aluminium Conductors (AAC) and Aluminium

Conductors Steel Reinforced (ACSR)

are used for low, medium

and high-voltage electricity

transmission and distribution.

The cables are manufactured

according to SLS 750, BS

215 (Parts I & II) and ASTM

standards.

Auto CablesPVC insulated single core auto

cables are used in motor

vehicles and general wiring.


25

Sierra Cables PLC

Unarmoured Cables (Multi-Core)Copper conductors insulated with PVC or XLPE and PVC

sheathed, with a voltage rating of

600/1000v. These are utilised for

the distribution of electricity

within factories and buildings

and manufactured to BS 6346

and BS 5467 standards.

Co-axial CablesAnnealed copper conductors

with polyethylene Insulated

and copper braided co-axial

cables, used as television

antenna wires. The cables are

manufactured to JIS Standards.

Earth CablesSierra Earth cables are solid,

stranded or flexible copper

conductors with PVC

insulation, non-sheathed with

a voltage rating of 450/750v.

These single-core Earth

conductors are used as general-

purpose cables and manufactured

according to BS 6004 and SLS 733 standard.

Flexible CablesPVC insulated and sheathed

flexible cables with a voltage

rating of 300/300v and

300/500v are used as general

purpose cables. These are

manufactured to BS 6500 and

SLS 1143 standards.

LSHF (Low Smoke Halogen Free) cables

LV cables with LSFZH, thermosetting

insulation generates slow emission

of smoke fumes and toxic gasses

and zero halogens with exposure

to fire. This type of earth cables

are used in areas with high risk of

fire hazards.


26

Sierra Cables PLC

Sustainability Review

Sustainability is not merely a static agenda for Sierra

Cables. We are aware that the issues that impact the

environment, our customers, employees and the larger

community change over time and we as a responsible

corporate entity are prepared to evolve with these

changes. Our approach to sustainability is based on a

holistic view which integrates the sustainability agenda to

the entire business process.

Strategic Sustainability Drivers

Stakeholder Engagement

We engage with a range of stakeholders and our relationships with each of these stakeholders have an impact on the

viability and the success of our business and vice versa. Therefore, Sierra Cables constantly commit to a transparent

and ongoing communications with each stakeholder group to form mutually beneficial relationships. We engage with

stakeholders in numerous ways and the frequency of engagement depends on the issues that are being addressed.

Stakeholder Method of Engagement Business Objective

Shareholders Annual General Meeting / Group website / Timely communications / Email access to group management

Maintain shareholder confidence and maintain a balance between profits and sustaining long term profitability

Customers Group website and social media / Customer relationship management / Interactions at operational levels / Media

Achieving customer service excellence

Employees Regular meetings / Circulars / Emails / Performance review

To assist employees reach their potential and increase performance efficiency while rewarding dedication and positive end results

Suppliers Feedback evaluation / Registration of suppliers To source optimal raw material and maintain internationally accepted standards

Environment Audits / Obtaining standardization certificates To promote environmental conservation and mitigate the effects of environmental damage

Environmental impact management

Sierra Cables employs a well-placed environmental strategy and a framework to mitigate environmental damage and

continuously explore innovative processes that will complement this endeavour. This framework has enabled us to better

control the impacts on the environment, reduce the risk of potential costly pollution incidents and ensure compliance with

Adherence to

Local and

International

Standards and

Protocol

Innovation

ResourceOptimization

MinimizingEnvironmental

Damage

SustainableGrowth


27

Sierra Cables PLC

environmental legislation. Our environmental policies

and practices comply with specifications of ISO 14001

Standard certification.

Environmental Policy Objectives

• Optimizing the use of raw materials, energy

and natural resources.

• Identifying waste streams and implementing

measures to minimize generation of such, in

order to reduce environmental pollution.

• Communicating this policy effectively to

employees, suppliers and other stake holders.

• Provide necessary training to create the

awareness towards the achievement of the

greener responsibilities of employees.

Sustainability through Product Quality

Our manufacturing process is conducted in accordance

with international standards and we constantly strive

to create value for customers without compromising

our environmental standards. During our manufacturing

process we follow British Standards (BS) and French

Standards (NFC) while our products intended for the Sri

Lankan market are certified by the Sri Lankan Standards

Institution (SLSI) through which Sierra Cables has

obtained the ISO 9001:2008 for its quality management

system.

RoHS Compliance Initiatives

We strictly adhere to RoHS compliance standards.

RoHS stands for Restriction of Hazardous Substances.

RoHS, also known as Directive 2002/95/EC, originated

in the European Union and restricts the use of specific

hazardous materials found in electrical and electronic

products. The restricted materials which include lead (Pb),

used in cable insulation and sheathing are hazardous to

the environment and pollute landfills, and are dangerous

in terms of occupational exposure during manufacturing

and recycling. Accidental fires and incineration of waste

scrap from wire and cable leads to the release of lead

(Pb) and other heavy metals and toxic substances. In

the case of a landfill, especially under acidic conditions,

this hazardous substance is likely to contaminate soil

and ground water. We utilize lead (Pb) free PVC to

manufacture cables in compliance to RoHS standards to

minimize the negative impact on the environment.

Cable Drum Re-use Programme

In line with our sustainability agenda and the strategy to

optimize resources, Sierra Cables follow a wooden drum

recycle and reuse programme. Wooden drums are used

to wind cables and transport those to customers which

we collect from the customers once the purpose is served

and the drums are empty. Following an assessment of

each wooden drum, we reuse the drums for the next

rewinding process.

Supplier Standard Management

We follow a rigorous selection as well as a pre and post

analysis process to ensure that our suppliers adhere to a

high level of environmental impact mitigation and health

and safety standards. We are committed to sourcing raw

material from reputed suppliers that adhere to the same

standards that we uphold.

Sustainability Challenges and Opportunities

Lack of awarenessamongst suppliers andcustomers with regard

to sustainablebusiness practices

Engage withcustomers and

suppliers to promoteoptimum capacity

utilization and promotethe business

advantages ofsustainablepractices

Maximizing assetand resources

utilization

Improveresource utilization

across all crossfunctions and upgradebusiness infrastructure

to enhancee�ciency

Challenges Opportunities


28

Sierra Cables PLC

HR Review

Human Capital

Our human capital plays a key role in business growth and

success. Sierra Cables is committed to providing essential

training to enhance employee skills, timely rewards

and remuneration as well as creating a safe working

environment.

We provide equal opportunities for the employees and

the company does not discriminate existing and potential

employees based on their ethnicity, gender or sexual

orientation.

At Sierra Cables we strictly refrain from employing

forced labour and child labour or conducting any type

of unfair labour practices. As at 31st March 2017 the

total workforce of Sierra Cables was 318. Majority of

employees are from the age group 25 – 35 years.

Age-wise Analysis

8%

25%

35%

17%

15%

18-25 Years 26-35 Years 36-40 Years

41-50 Years 26-35 Years

Employee Category-wise Analysis

Permanent Casual Contract

95%

4%1%

Service Period-wise Analysis

23%23%

18%

15%

21%

Above 10 Years 6-10 Years 3-05 Years

1-02 Years Below 1 Years

Training & Development

We continuously provide training and development

opportunities to our staff both locally and abroad. Each

department utilizes the annual performance evaluation

system to identify key training requirements and organize

training programmes accordingly.

In addition, Line Managers hold the responsibility

of identifying training requirements and proposing

necessary training programmes to the Human Resources

Department. Training programmes are designed with the

dual goal of enhancing business success and employee

growth. Apart from specific training programmes,

the company facilitates employees’ higher education

aspirations.

We offer a range of structured and on the job training

programmes designed to develop technical competencies

as well as soft skills of our employees through leadership

development, motivational training and guidance in

management practices.


29

Sierra Cables PLC

In addition, we engage external parties such as the

Industrial Training Institute (ITI), Sri Lanka Standard

Institute (SLSI) and the Sri Lanka Institute of Marketing

(SLIM). Annually a selected number of senior employees

attend training programmes conducted overseas.

HR Audit

In 2016, we conducted a employee attitude survey

to identify areas that requires improvement and the

feedback concluded the necessity of revisiting the

employee benefit plan. We have reviewed the existing

benefit plan and have laid out the groundwork to

implement a grading system which will allow us to

address employee concerns and improve the existing

benefit plan.

Currently, we evaluate employees bi-annually and salary

increments are identified based on the performance of

the employee.

Health & Safety

Employee safety is a key concern for Sierra Cables and

in this regard we have implemented a set of practical

steps to create a safe working environment. Apart from

providing timely training and instructions on safety

and wellbeing, we provide required Personal Protection

Equipment (PPE) to our employees.

We carry out frequent safety awareness meetings

and workshops. Sierra Cables has been certified by Sri

Lanka Standards Institution through OHSAS 18001:

2007 for Occupational Health & Safety practice in the

organization.

Employee Engagement

We believe that cordial relations amongst employees

and networking opportunities have a direct impact on

work efficiency and employee satisfaction. The company

organizes various social gatherings and activities to

engage employees to network and make connections.


30

Sierra Cables PLC


31

Sierra Cables PLC

Risk Management Review

The management of risk in a corporate world consists

of identifying, analyzing, quantifying and addressing all

possible risk factors to minimize threats that could harm

an organization. The competent management of risk can

also help identify potential opportunities while ensuring

good governance. It is equally important to note that risk

management is a recurrent process which plays a vital

role in an organization’s performance from the level of

corporate decision making.

To conduct a successful risk management process an

organization must achieve the effective balance between

identifying and minimizing the threat to future losses

and recognizing true opportunities for future growth and

development.

Risk Management strategies are focused on identifying

risk factors, developing solutions to overcome them and

implementing effective strategies to reduce the impact. It

is best to give special consideration to the suggestions of

the experienced personnel within the organization since

the relative importance of a risk can be elaborated more

precisely by them.

The risk management of a company is based on the

level of risk appetite. At Sierra Cables our appetite is

neither low nor high but moderate or more often above

the moderate level. This has enabled us to accept the

right level of risk suitable for the company avoiding

unnecessary risk that could hinder the future of the

company, thereby ensuring a smoother process.

Sierra Cables Risk Management Process

Identification of possible risk factors, both within and

outside the company is a continuous and vigilant task. It

requires a proactive mindset from all personnel at every

level within the organization. Their equal contribution is

highly valued and encouraged by the top management in

order to achieve a broader perspective in decision making.

With these perspectives the top management is then

able to commence the next vital step in risk management,

which is to analyze and prioritize the potential risk factors

accordingly.

This is vital when operating in a highly volatile

environment as the company’s resources need to be

ready at any given time. At this stage it is mainly the

top management that takes the initiatives of clearing

the path for future objectives and goals. However, in

the planning stage the middle level managers who are

experts in various fields’ takes part to better formulate

and strategize the plans. Their ideas together with

previous experiences will support to develop an action

plan on how to face future risks and take effective actions

appropriately.

The action taken for risks can be threefold. They are

acceptance, avoidance and mitigation. The finalized

action plan will be implemented concentrating on

taking any of the three actions specified above. Similarly

the implementation demonstrates the quality of the

previous stages of the risk management process. The

final step is crucial if the company is to reap the benefits

of risk management because it guarantees that the

implementation has taken place according to the planned

manner. At the same time the controlling and monitoring

stage also considers environmental change to ensure the

actions taken are complied according to the timely needs.


32

Sierra Cables PLC

We have identified the below as key risks faced by the Company.

Financial Risk Impact Mitigation Process

Liquidity

Interest Rates

Exchange Rates

Credit Collection

Main impact is on the working capital and profitability whereas the sustainability of the Company is affected

Monthly meetings with sales representatives to review on debt collection. Positive relationships with financial institutions in order to obtain lucrative rates

A separate method to assess the potential of customers in terms of their credit worthiness

Agreeing for "Call Options Forward Contract"

Looking for supplier credit to mitigate costly fluctuations in local interest rates

Business Risk Impact Mitigation Process

Market Risk Price changes can directly impact on the profit When setting prices it is possible to match with raw material prices

Setting sales targets considering Company’s potential

Having a thorough idea on the trends in the market

Planning

ImplementingAnalysing &Prioritizing

the Risks

Monitoring& Controlling

BusinessContext

IdentifyingKey Risks

RiskManagementFramework

Risk Management Review Contd.


33

Sierra Cables PLC

Operational Risk Impact Mitigation Process

Health & Safety of Employees

Changes in Environmental

International Quality Standards

& Regulatory Environment

Impact on employees personal and work life

Future existence of the business

Employee performance evaluation scheme

Good relationships with employees through the activities of the employee welfare society

Providing training on industrial safety

Obtaining the ISO 9001:2000 Standard

Obtaining the ISO 14001 Standard

Obtaining the OHSAS Certificate

Providing required Personal Protection Equipment

Continues inspection on working environment condition

Product Risk Impact Mitigation Process

Customer satisfaction

Cost effectiveness

Decline in market share Maintaining SLS Standard

Bidding with competitive prices

Proper testing to identify quality defects

Production planning

Information Risk Impact Mitigation Process

Timely & accurate information for decision making

Systems operation & application.

Lack of accurate and timely decision making Use of an ERP system for timely decision making

Data backup procedure

Agreements with IT vendors for support and maintenance

Regular upgrading of the systems


34

Sierra Cables PLC

IT Review

Information Technology and the use of the latest

technological advancements are essential ingredients

of business growth, cost reduction and environmental

impact mitigation. In this context, Sierra Cables

have taken several practical measures to adopt new

technologies and leverage competitive advantage in a

competitive industry.

A Strengthened IT Platform

The current Enterprise Resource Planning (ERP) system

(Microsoft Dynamics NAV (Navision) )that the company

employs facilitates the integration of the module with

core functions of Marketing, Purchasing, Administration

and Finance Management, enabling us to operate on a

lean and efficient cost structure.

Our systems have been designed and developed using the

latest technology and is backed by the best practices and

internal controls of the highest standards. Our Business

Intelligence processes enable employees to analyze data

intelligently and come up with actionable information to

make informed business decisions.

Sales Force Automation

In 2016, we took the initial step to automate our sales

force in order to streamline our sales process and improve

efficiency. This effort also aligns with our plan to operate

in an entirely paperless business environment by 2020.

The company has already laid out the groundwork to

operate entirely within a digitalized environment.

"Sierra Cables is committed to investing in our people to pave the way for business growth that coincides with human capital growth."


35

Sierra Cables PLC

Corporate Governance

Sierra Cables PLC has always paid close attention to

maintaining high standards of corporate governance. It

has been an ongoing focus point of importance with the

Board of Directors ever since the Company was listed. The

Directors have ensured that the company adheres to the

various guidelines, especially those issued by regulatory

bodies and the legislation of the company, such as the

Institute of Chartered Accountants Sri Lanka, Securities &

Exchange Commission and the Companies Act of 2007.

Furthermore, the Board conducts all acts with

transparency and are bound by the directives issued

by the CSE. As the Board is appointed annually by the

company shareholders each Board member seeks to

achieve the objectives of the company including good

governance, on behalf of them. Hence, this concept

was developed to ensure that the above goal is met by

ensuring good relationships between the shareholders,

Board of Directors, management and other stakeholders.

The Board is also obliged to act in the best interest of the

company and thereby work to enhance the shareholders’

wealth.

When the management takes part in governance in a

responsible way it will provide a fundamental background

for sound decision making and help raise the performance

of the company. With this in mind the Board always

strikes a balance on the two dimensions, conformance

and performance. Otherwise lack of concentration

on either can yield a wrong doing from both aspects.

Therefore we believe that we have maintained the right

level of governance while achieving the highest possible

profit. Sierra Cables corporate governance framework can

be demonstrated as follows.

BOARD OFDIRECTORS

SHAREHOLDERS

AUDITORS

BOARD SUBCOMMITTEES

(AUDIT,REMUNERATION

& RELATED PARTY TRANSACTION)

MANAGINGDIRECTOR /

CEO

TOPMANAGEMENT


36

Sierra Cables PLC

The Board Balance

The responsibility of the Board of Directors is to operate

the company by acting in a manner that reflects the

best interest of the company. Nine Directors were

appointed as the Board of Directors. Out of the nine,

eight are Non-Executive Directors. Four out of the eight

Non- Executive Directors are Independent Directors. All

directors are veterans in their fields such as engineering,

law, construction, marketing, finance and public

administration. Their years of experiences are the reason

for the continual success of the company.

Despite the varying levels of shareholding possessed by

the Directors, equality is a major fact that is prevalent

at all times with in the Board. It is not compromised

with the dominance of one or group of Directors when

decision making comes.

Chairman and Chief Executive Officer

The Board is led by the Chairman who is also an Executive

Director. The Chairman’s leadership will take the company

to unattainable heights with high strands of efficiency,

effectiveness and professionalism.

In an ever changing environment such a leadership is the

core on directing and controlling the organization for

better performance. The CEO on the other hand handles

a totally different set of duties and responsibilities. The

CEO will contemplate on improving the shareholder

value by formulating strategy, evaluating its viability and

implementing them to reach for the desired purposes.

Board Meetings

Board meetings are scheduled to be held every two

months. In these meetings the Board considers the

performance of the company from many angles. The

monthly financial performance, selling and distribution,

key projects, investment opportunities, key risks faced,

appointments, etc. are some of the areas thoroughly

considered. This is also one of the main controlling

techniques of the Board.

Responsibilities of the Board

The Board is responsible for :

1. Enhancing shareholder wealth.

2. Planning and guiding the business towards

meeting the set objectives.

3. Ensuring the interests of all stakeholders is

considered in corporate decisions.

4. Formulating, communicating, and monitoring

business policies, overall strategies and

corporate goals to ensure sustained growth.

5. Assessing and approving the implementation

of management and internal control systems.

6. Ensuring the compliance with all statutory and

other obligations being met.

Audit Committee

The audit committee mainly looks at legal and financial

compliance of the company. Both these areas will

cover the accounting practices, financial control, risk

management, etc. In order to look into these matters

responsibly the board has appointed three independent

Non-Executive Directors. They are,

Corporate Governance Contd.


37

Sierra Cables PLC

Mr. M.N. Gunasekera

Chairman - Non-Executive Independent Director


Non-Executive Independent Director

Eng. B.N.W. Rupasinghe


The committee has met six times during the year.

The meetings are attended by the Managing Director,

Chief Financial Officer by invitation and other Directors

and Executives when required. The chairman of the

committee comes with a vast experience. Mr. M.N.

Gunasekera is also a fellow member of the Institute of

Certified Management Accountants.

Duties and Responsibilities

Audit

1 Recommend the Board of the appointment

and removal of external auditors and review

their terms of engagement.

2. Determine with the external auditors, the

audit plan and scope and their authority and

responsibilities.

3. Oversee and appraise the quality of audits

conducted and monitor their effectiveness.

4. Review external audit reports and

recommendations and ensure appropriate

management response to recommendations.

5. Monitor the relationship between management

and the external auditors.

6. Review and assess the independence of the

external auditor.

Accounting

1. Monitor and review the adequacy of the

company’s accounting system and internal

control environment.

2. Review the annual and semi-annual financial

statements of the company, and make

recommendations to the Board.

3. Determine company specific accounting

policies within the ambit of the accounting

standards.

4. Review significant transactions which are not a

normal part of the company’s business.

Risk Management

1. Identify and assess areas of risks which

might impact on the company and research

appropriate mitigations.

2. Monitor, review and evaluates the adequacy

and effectiveness of the company’s risk

management controls, both internally and

externally.

3. Evaluate the effectiveness of the company’s

business continuity plans.

4. Evaluate the adequacy of the company’s

insurance covers at least annually.

The Audit Committee has recommended to the Board of

Directors that Messers KPMG, Chartered Accountants to

appoint as Auditors for the year ending 31st March 2018

subject to the approval of the shareholders at the next

annual general meeting.


38

Sierra Cables PLC

Remuneration Committee

The Remuneration Committee works to attract and

retain Directors, executives and employees for the

company. Also through the decisions of the Remuneration

Committee it is expected to obtain the highest level of

contribution for the achievement of goals and objectives

of the company. There by it expects to create a good

value for the shareholders.

The Sierra Cables PLC's Remuneration Committee

consists of two Non-Executive Independent Directors as

follows;



Mr. M.N. Gunasekera

Non -Executive Independent Director

Eng. B.W.N. Rupasinghe


The main responsibilities of the Remuneration Committee

are;

1. To review and approve the Remuneration

policy of the company.

2. To advice on structuring Remuneration

packages that enable the company to attract,

retain and motivate high caliber individuals

with the requisite skills.

3. To recommend to the Board of Directors the

Remuneration to be paid to the Executive

Directors, Non-Executive Directors, their pre-

requisites and allowances.

Related Party Transactions Review Committee

The members of the Related Party Transactions Review

Committee are;

Mr. M.N. Gunasekera




Eng. B.N.W. Rupasinghe


The main responsibilities of the Related Party

Transactions Review Committee are as follows;

Authorise and review all Related Party Transactions to

ensure compliance with the Listing Rules, compliance

with stock exchange and legal requirements, concerning

the respective transactions.

In the event a Related Party Transaction will be ongoing

(recurrent transactions), the Related Party Transactions

Review Committee has established guidelines for the

senior management to follow in respect of ongoing

dealings with the Related Parties.

Thereafter, the Committee on an annual basis, would

review and assess ongoing relationships with the related

parties, to determine whether they are in compliance

with the Committee’s guidelines and that the Related

Party Transactions remain appropriate.



39

Sierra Cables PLC

Board Meetings and Sub Committee Meetings

Name of the Director Board MeetingsAudit Committee

Meetings

Remuneration Committee Meetings

Related Party Transaction

Review Committee Meetings

Executive Non-Independent Directors

Mr. D.S. Panditha 6/7 - - -

Non-Executive Directors

Mr. W.A.P. Perera (Chairman) 7/7 - - -

Mr. D.N.N. Lokuge 1/7 - - -

Mr. E.A.D.T.B. Perera 3/7 - - -

Ms. G. S. M. Irugalbandara 5/7 - - -

Ms. S.N. Lokuge 3/7 - - -

Non-Executive Independent Directors

Mr. J. H. P. Ratnayake 2/7 - - -

Prof. A.K.W. Jayawardane 6/7 6/6 1/1 1/1

Eng. B.W.N. Rupasinghe 4/7 6/6 1/1 1/1

Mr. M.N. Gunasekara 7/7 6/6 1/1 1/1

Dates of Meetings

27.05.2016 27.05.2016 11.08.2016 11.08.2016

11.08.2016 11.08.2016 - -

28.10.2016 25.10.2016 - -

30.11.2016 28.10.2016 - -

26.01.2017 20.01.2016 - -

06.02.2017 25.01.2016 - -

30.03.2017 - - -

Internal Control

The Internal Control system encompasses the financial,

operational, risk management and regulatory compliances

of the company. Maintaining effective control is vital as

it is the responsibility of the Board. All the sectors have

different controls developed uniquely for themselves.

Their discipline and commitment will ensure correct

processes are maintained within the company. The

effectiveness of these controls is reviewed regularly

through the Management Review meeting and Board

Meetings. One of the main items heavily discussed

in every Management Review meeting is the Key

Performance Indicators (KPI).

It summarizes the performance of every department

of the company on a monthly basis. Even though all

these controls are in place we cannot reject the fact

that exceptions can appear in an unexpected manner.

Therefore either through preventive or corrective actions

such situations should be managed.

However the ultimate expectations thus will be to

develop and maintain accurate processes, information

and customer satisfaction. Simply this will ensure

maximization of shareholder wealth and the quality of

the company’s performance.

40

Annual Report 2016 / 2017Sierra Cables PLC

Reference to the SEC & ICASL Code, CSE Listing

Rules Compliance Details of Compliance

1. COMPANY

A.1. Director

(The Board)

A . 1/7.10.1(a)

7.10.2(a) and 7.10.3 (c-d)

Compliant The Board of Directors currently consists of nine (09) members including Chairman.

The day to day monitoring and operations of the organization has been delegated to the Chief Executive Officer (CEO) and the Executive Committee governed by policies, procedures and authority by the Board of Directors.

The Board is accountable to the stakeholders of the Company to ensure that the business is conducted in an appropriate manner based on an approval business plan and the financial and non-financial targets of the Company are achieved. The Board’s Terms of Reference stipulate the specific duties of the Board and the following are some key matters which come under the Board’s review and approval;

I. Company strategy and business plan

II. Financial reporting and internal controls

III. Financial performance

IV. Dividend policy

V. Changes to capital structure

VI. Constitution and performance of the Board Committee

VII. Regulatory compliance

Company Board Meetings A.1.1 Complied Seven (07) Board meetings were held to review financial performance and to consider other matters such as strategic and operational plans.

Responsibilities of the Board

A.1.2 Complied The Board is collectively responsible for formulation, implementations and monitoring of business strategies. In order to do so, the Board appointed committees are constituted to assist the main board in fulfilling its stewardship function by reviewing systems of internal control, internal and external audit, risk management, IT systems and financial reporting to shareholders.

Compliance with laws and access to independent professional advice

A.1.3 Complied The Board members are permitted to obtain independent professional advice from third parties as deemed necessary which includes the Company’s external lawyers and auditors at the expense of the Company.

Company Secretary A.1.4 Complied The Company secretary possesses the required qualifications and expertise, and advises the Board on matters concerning the Companies Act and other relevant rules, regulations and regulatory guidelines.

Independent judgment of the Directors

A.1.5 Complied All the Board members actively participate in the Board meeting by bringing up their own independent judgment.


41



Dedicating Adequate time and effort

A.1.6 Complied The Board members dedicate adequate time for the affairs of the Company by attending Board meetings, Board appointed sub-committee meetings and by making decisions via circular resolutions.

A.2 Chairman and Chief Executive Officer (CEO)

There is a clear demarcation of the responsibilities between the Chairman and the CEO. The functions performed by the Chairman and the CEO are distinct and separate, ensuring the balance of power and authority within the organization, so that no person has unattended powers of decision-making and implementations.

A.3 Chairman’s Role

The Chairman is responsible for leadership of the Board, managing Board meetings and the business undertaken threat. The Chairman is responsible to ensure that all relevant issues of the Company are dealt with on the Board Agenda and that Directors receive all appropriate information and documentation in a timely manner, thus facilitating the Directors to contribute at the deliberations.

Role of Chairman A.3.1 Complied The Chairman should ensure Board proceedings are conducted in a proper manner.

A.4 Financial Acumen

Financial Acumen A.4 Complied Our Directors with their academic and/or entrepreneurial financial skill, business acumen and wide practical wisdom contribute substantial value, knowledge and independent judgment to decision making on matters concerning finance and investment

A.5 Board Balance

Presence of Non- Executive Directors

A.5.1

7.10.1(a), 7.10.2(a) and 7.10.3(a)

Complied Eight of the nine Directors of the Board hold office in a Non-Executive capacity.

Independence of Non-Executive Directors

A.5.2 & 5.3

5.5, 7.10.2(a-b) and 7.10.3(a-b)

Complied The Board comprises of four Independent Non-Executive Directors.

Annual Declaration of Non-Executive Directors

A.5.4

7.10.2(b)

Complied Each Non-Executive Director submits a signed and dated declaration annually of his Independence or Non -Independence against a specified criteria as set out in Appendix 7A of Colombo Stock Exchange listing rule section 7.10.2(b).

Requirement to appoint a ‘Senior Non-Executive Director’

Requirement to appoint a ‘Senior Non-Executive Director’

Not applicable This is not relevant to the Company as the Chairman and CEO roles are segregated.

Chairman conducting meetings with the Non-Executive Director

A.5.9 Complied The Chairman meets with the Independent Non-Executive Director as and when necessary.

Recording of concerns in the Board minutes

A.5.10 Complied Where Directors have concerns about the matters of the Company which cannot be unanimously resolved, their concerns are recorded in the Board minutes.


42



A.6 Supply Information

Obligation of the Management to provide appropriate and timely information

A.6.1 Complied The Group has a state-of-art management information system to process and monitor the performance of the Group. Appropriate and timely information is made available to the Board members who make further inquiries when necessary.

Adequate time for circulation ad respective Board documents

A.6.2 Complied Board papers, agenda and previous Board minutes to be tabled one week prior to Board Meeting.

A.7 Appointment to the Board

Disclosure to Shareholders

A.7.3 Complied

A.8 Re-election

Re-election of Directors A.8.1 and A.8.2 Complied To comply with the Articles of Association, the Directors who have been appointed to the Board during the year, hold office until the next AGM, and are required to retire and a new Director to be re-elected by the shareholders.

A.9 Appraisal of Board and the subcommittees

A.9.1,A.9.2 and A.9.3 Complied The Board annually appraises itself on its performance in the discharge of its key responsibilities. The Board also undertakes an annual self evaluation of its own performance and that of its committees and the Board states on how such performance evaluations have been concluded.

A.10 Disclosure of information in respect of Directors

Directors’ Disclosures A.10.1

7.10.3(c-d)

Complied The names of the Directors of the Board, their leadership expertise, skills and their profiles are disclosed on page 16 to 17 of this Annual Report. Director’s interests in contracts are indicated in Note 35.2 of the Financial Statements of this Annual Report. Names of the Chairman and the members of the Boards Committees are provided on page 54.

A.11 Appraisal of Chief Executive

Setting of the annual targets and the appraisals of the CEO

A.11.1 and A.11.2 Complied The CEOs performance is reviewed annually.

Appraisals of the CEO



43



B. DIRECTOR’S REMUNERATION

B.1/7.10.5 Remuneration Procedure

Establishment of a Remuneration Committee and its composition

B.1.1, B.1.2 and B1.3

7.10.5(a) and 7.10(b)

Complied The Remuneration Committee comprises of Prof. A.K.W. Jayawardane, Mr. M.N. Gunasekera and Eng. B.W.N. Rupasinghe being independent Non-Executive Directors. Prof. A.K.W. Jayawardane is the Chairman of the Committee. The details of the Remuneration Committee’s composition, policies and responsibilities are set out on page 49 of this Annual Report.

Determination of the remuneration of the Non-Executive Directors

B.1.4 Complied The Board as a whole decides the remuneration of the Non-Executive Directors. The Non-Executive Directors receive a fee for being a Director of the Board and fee participating as a sub committee member.

Consultation with the Chairman and the CEO

B.1.5 Complied Input of the Chairman is obtained as the Chairman of the said Sub Committee. External professional advice is sought on a need basis.

B.2 Level and Makeup of Remuneration

Level and makeup of the remuneration of Directors and comparison of remuneration with other Companies

B.2.1, 2.2 and 2.3 Complied The remuneration scheme for Executive Directors is structured to align rewards to their individual and Corporate performance targets.

Performance –based remuneration

B.2.4 Complied The performance related payments for Executive Directors is structured to align with individual Corporate performance targets.

Executive share options B.2.5 Not applicable

Designing the remuneration

B.2.6 Complied Provisions set-out in Schedule E of the Code of Best Practice is considered.

Early termination of Directors

B.2.7 and B.2.8 Complied

Remuneration of Non-Executive Directors

B.2.9 Complied Non-Executive Directors fee are compared with the market rates

B.3/7.10.5 (C) DISCLOSURE OF REMUNERATION

Disclosure of remuneration policy and aggregate remuneration

B.3.1 Complied Please refer Remuneration Committee Report

C. RELATIONS WITH SHAREHOLDERS

C.1 Constructive use of Annual General Meeting

Use of Proxy C.1.1 Complied We ensure that all proxy votes are counted and the quantum of proxies lodged on each resolution is conveyed to our Chairman.


44



Separate resolution for substantially separate issues

C.1.2 Complied Separate resolutions are proposed at an Annual General Meeting on each substantial issue.

Chairman of Board Committee to be present

C.1.3 Complied At an Annual General Meeting (AGM) the respective Chairman of the Remuneration, Audit and Nomination Committees are present to provide any clarification to shareholders as necessary.

Adequate notice of Annual General Meeting and summary of Procedure

C.1.4 and C.1.5 Complied The notice and the agenda of the AGM together with the Annual Report of the Company containing the relevant documents are sent to the shareholders giving 15 working days’ notice prior to the date of the AGM

C.2 COMMUNICATION WITH SHAREHOLDERS

Effective communication with the shareholders

C.2.1,C.2.2,C.2.3, C.2.4 Complied The Board maintains a two-way communication with all investors providing an opportunity to seek non-price sensitive information throughout the year by conducting meetings and discussions and answering queries through our Company Secretarial Division and/or Communications Teams.

D. ACCOUNTABILITY AND AUDIT

D.1 Financial Reporting

Board responsibility to present the financial statement

D.1.1 Complied The Board presents a balanced and understandable assessment extending to interim and other price-sensitive public reports to regulators, as well as the information required to be presented by statutory requirements complying with regulatory deadlines.

Annual Report of the Directors

D.1.2 Complied Declaration by the Directors that the Company has not engaged in any activities, which contravenes laws and regulations, declaration of all material interests in contracts, equitable treatment of shareholders and going concern with supporting assumptions or qualifications as necessary.

Please refer to Annual Report of the Board of Directors on pages 52 to 57.

Statement by the Directors and the Auditors

D.1.3 Complied Please refer the Statement of Directors' Responsibilities on page 51.

Management discussion and analysis

D.1.4 Complied Please refer Management Discussion and Analysis on pages 16 to 29.

Declaration by the Board as to whether the business is a going concern

D.1.5 Complied Please refer to Annual Report of the Board of Directors on pages 52 to 57.

Requirement for an Extraordinary General meeting in a situation of serious loss of capital

D.1.6 Not Applicable



45



D.2 Internal Control

Directors to review Internal Controls

D.2.1 Complied The Board is responsible for establishing a sound framework of risk management and internal controls and monitoring its effectiveness on a continuous basis

Requirement to review the need for an Internal Audit function

D.2.2 Not applicable The Group already has an internal audit division, and as such this is not applicable.

D.3/7.10.6 Audit Committee

Composition of the Audit Committee and its duties

D.3.1 and D.3.2/7.10.6(a) and 7.10.6(b)

Complied The Audit Committee comprises of Mr. M.N. Gunasekara, Prof. A.K.W. Jayawardene and Eng. B.W.N. Rupasinghe being Independent Non-Executive Directors. Mr. M.N. Gunasekara is the Chairman of the Committee. The details of the Audit Committee’s composition, policies and responsibilities are set out on pages 47 to 48 of this Annual Report.

Terms of reference of the Audit Committee

D.3.3 Complied Please refer to the Audit Committee Report on pages 47 to 48 of this Annual Report.

Disclosure of names of the members of the Audit Committee

D.3.4

7.10.6(C)

Complied Please refer to the Audit Committee Report on pages 47 to 48 of this Annual Report.

D.4/ 9. Related Party Transactions Review Committee

Composition of the Related Party Transactions Review Committee and its duties

D.4.1

9.2

Complied The Related Party Transactions Review Committee comprises of Mr. M.N. Gunasekara, Prof. A.K.W. Jayawardene and Eng. B.W.N. Rupasinghe being Independent Non-Executive directors. Mr. M.N. Gunasekara is the Chairman of the Committee. The details of the Related Party Transactions Review Committee’s composition, policies and responsibilities are set out on page 50 of this Annual Report.

Terms of reference of the Related Party Transactions Review Committee

D.4.2 Complied Please refer to the Related Party Transactions Review Committee Report on page 50 of this Annual Report.

Disclosure of names of the members of the Related Party Transactions Review Committee

D.4.3 Complied Please refer to the Related Party Transactions Review Committee Report on page 50 of this Annual Report.

D.5 Code of Business Conduction and Ethics

We are committed to carrying out all business activities to the highest standards of integrity, ethical values and professionalism, whilst following the laws of the country, international laws and compliance as per our stakeholders’ expectations.

Disclosure on a the presence of Code of Business Conduct and Ethics

D.5.1 Complied


46



Affirmation of the code of conduct and ethics

D.5.2 Complied As per our Chairman’s statements on Pages 12 to 13 of this Annual Report, we affirm our adherence to good business conduct and ethics.

D.6 Corporate Governance Disclosures

Disclosures of Corporate Governance

D.6.1 Complied We aim to achieve greater year-on-year growth and value creation, improve stakeholder satisfaction and relationships in our business activities, whilst adhering to the highest standards of corporate governance as is evident in this Annual Report on pages 35 to 46.

2. SHAREHOLDERS

E. INSTITUTIONAL INVESTORS

Shareholder voting E.1.1 Complied We conduct regular and structured dialogues with shareholders based on a mutual understanding of objectives.

F. OTHER INVESTORS

F.1 Investing and divesting decision

Investing and divesting decision

F.1 Complied Individual shareholders, investing directly in shares of companies are encouraged to carry out adequate analysis or seek independent advice in investing or divesting decision.

F.2 Shareholders Voting

Individual shareholders’ voting

F.2 Complied Individual shareholders are encouraged to participate in General Meetings of companies and exercise their voting rights.




47

Sierra Cables PLC

Audit Committee Report Role of the Audit Committee

The role of the Audit Committee is to oversee and review

the financial reporting system of the Company, with a

view to safeguarding the interest of the shareholders and

all other stakeholders.

Composition

The Audit Committee, consisting of three non-executive

independent directors, has been constituted in

compliance with the 'Rules on Corporate Governance’

under the Listing Rules of the Colombo Stock Exchange.

The members of the Audit Committee are:

• Mr. M.N. Gunasekera - Chairman


• Prof. A.K.W. Jayawardane


• Eng. B.N.W. Rupasinghe


The other members participating, by invitation, at the

Audit Committee meetings are the Managing Director

and Chief Financial Officer.

Meetings

The Audit Committee had six meetings during the year

under review.

Name Attendance

Mr. M.N. Gunasekera 6/6

Prof. A.K.W. Jayawardane 6/6

Eng. B.N.W. Rupasinghe 6/6

Terms of Reference

As specified in the terms of reference, in relation to

its authority and duties,the Audit Committee was

established to assist the Board of Directors to fulfill their

oversight responsibilities, which include the integrity of

Financial Statements, risk management, business ethics,

internal control, compliance with legal and regulatory

requirements, review of Independent External Auditors’

performance and the Internal Audit.

Financial Reporting

In accordance with the stipulated requirements of the Sri

Lanka Accounting Standards, the Committee reviews the

following:

• Procedures to provide reasonable assurance

that all transactions are accurately and

completely recorded in the books of account.

• Effectiveness of financial reporting system is

in place to ensure reliability of the information

provided to the stakeholders. Accounting

policies to determine most appropriate

accounting policies after considering all choices

available.

• Process by which compliance with Sri Lanka

Accounting Standards, Companies Act No 7 of

2007 and other regulatory provisions relating

to financial reporting and disclosures are

ensured.

• Annual report and interim financial statements

prepared for publication, prior to submission to

the Board.

Compliance with Laws and Regulations

The Audit Committee reviewed the reports submitted

by the Management and the Internal Auditors on

compliance with applicable laws and regulations. The

Committee is satisfied that Laws and Regulations are duly

complied with and statutory payments have been made

on a timely basis.


48

Sierra Cables PLC

Internal Control, Internal Audit & Risk Management

In its review of effectiveness of internal controls,

the Committee examined the business processes to

ensure that reasonable assurance can be provided to

the directors that assets are safeguarded and that the

financial reporting system can be relied upon in the

preparation and presentation of the financial statements.

The Audit Committee monitors and guides the firm of

Chartered Accountants engaged in the Internal Audit, in

its audits, according to the plan of activities which covers

financial and operational audits, risk assessments and IT

security reviews. The reports of the Internal Auditors have

been reviewed, discussed by the Committee, and initiated

corrective measures.

Independent Auditors

The Committee is satisfied that the independence and

objectivity of the Independent External Auditors has not

been impaired by any event or service that gives rise to

a conflict of interest. Due consideration has been given

to the nature of the services provided by the Auditors

and the level of audit and non-audit fees received by the

Auditors from the Group. The Committee also reviewed

the arrangements made by the Auditors to maintain their

independence and confirmation has been received from

the Auditors of their compliance with the independence

guidance given in the Code of Ethics of the Institute

of Chartered Accountants of Sri Lanka. The Audit

Committee recommends the re-appointment of Messrs

KPMG, for the financial year ending 31st March 2018

Conclusion

In its continuous assessments, the Audit Committee is

satisfied that the Group's accounting policies, internal

controls, including operational controls, provide

reasonable assurance that the affairs of the Group are

managed in accordance with policy framework of the

Group, set out by the Board of Directors and that the

Group assets are properly accounted and adequately

safeguarded.

(Sgd)

M.N. Gunasekera

Chairman - Audit Committee

11th August 2017

Audit Committee Report Contd.


49

Sierra Cables PLC

Board Compensation and Remuneration Committee Report The main functions of the Remuneration Committee

include the provision of policy advice and

recommendations to the Board of Directors with regard

to remuneration of Executive Directors and Senior

Executives. The recommendations are aimed at being

attractive, fair and competitive to attract and retain

executive staff.

The Remuneration Committee appointed for the

financial year 2016-17 consists of three Non-Executive

Independent Directors as follows:

• Prof. A.K.W. Jayawardane - Chairman


• Eng. B.W.N. Rupasinghe


• Mr. M.N. Gunasekera


The Committee met once during the year under

review and discussed the current remuneration policy

and remuneration applicable to Executive Directors,

and the mechanism adopted to revise remuneration

of Executive Staff in line with company policies of

employee remuneration. Having carefully looked at the

new initiatives during the year under review, especially

the Sierra Cables East Africa Limited, the Committee

recommended an appropriate salary increase to the Chief

Executive Officer.

(Sgd)


Chairman - Remuneration Committee

11th August 2017


50

Sierra Cables PLC

Related Party Transaction Review Committee ReportRole of The Committee

The Committee assists the Board in reviewing all related

party transactions carried out by the Company. The

Committee also performs the oversight function on

behalf of the Board in complying with the Listing Rules

of the Colombo Stock Exchange and with the Code of

Best Practices on Related Party Transactions issued by

the Securities and Exchange Commission.

Composition

The Committee, consisting of three non-executive

independent directors, has been constituted in

compliance with the Listing Rules of the Colombo Stock

Exchange.

The Committee Members are :





• Eng. B.N.W. Rupasinghe


The other members participating, by invitation, at

Committee meetings are the Managing Director and the

Chief Financial Officer.

The Committee had one meeting during the year under

review

Policies & Procedures

The above committee was authorized to review all

Related Party Transactions to ensure compliance with the

Listing Rules, compliance with Stock Exchange and legal

requirements, concerning the respective transactions.

Terms of Reference

The Related Party Transactions Review Committee

has terms of reference, dealing with its authority and

duties. The Terms of Reference covers aspects relating

to matters prescribed in the listing rules of the Colombo

Stock Exchange.

Terms of reference of the Committee, among others,

include the following:

In the event a Related Party Transaction will be ongoing

(recurrent transactions), the Related Party Transactions

Review Committee has established guidelines for the

senior management to follow, in respect of ongoing

dealings with the Related Parties. Thereafter, the

Committee on an annual basis, would review and

assess ongoing relationships with the related parties,

to determine whether they are in compliance with the

Committee's guidelines and that the Related Party

Transactions remain appropriate.

Related Party Transactions during the Year

The activities and observations of the Committee are

communicated to the Board. Details of related party

transactions are disclosed in note 35.1 in the financial

statements.

(Sgd)

M.N Gunasekera

Chairman - Related Party Transactions Review Committee

11th August 2017


51

Sierra Cables PLC

Statement of Directors’ ResponsibilitiesThe responsibility of Directors in relation to the Financial

Statements is set out in the following statements. The

responsibility of the auditors, in relation to the Financial

Statements prepared in accordance with the provisions of

the Companies Act No. 7 of 2007 and other status which

are applicable to the preparation of Financial Statements

are set out in the Independent Auditors’ Reports.

The Financial Statements Comprise of:

A Statement of Financial Position, which presents a true

and fair view of the state of affairs of the Company and

its subsidiaries as at the end of the financial year; and

An Statement of Comprehensive Income, which presents

a true and fair view of the profit and loss of the Company

and its subsidiaries for the financial year, which comply

with the requirements of the Act.

The Directors are required to ensure that, in preparing these financial statements:

The appropriate Accounting Policies have been

selected and applied in consistent manner and material

departures, if any, have been disclosed and explained;

Requirements in the Sri Lanka Accounting Standards,

Companies Act No.07 of 2007 and listing rules of the

Colombo Stock Exchange, have been followed;

Judgements and estimates have been made which are

reasonable and prudent.

The Directors and also required to ensure that the

Company has adequate resources to contain basis in

preparing the Financial Statements.

Further, the Directors have a responsibility to ensure that

the Company maintains sufficient accounting records to

disclose, with reasonable accuracy, the financial position

of the Company and of the Group, and to ensure that

the Financial Statements presented comply with the

requirements of the Act.

The Directors are also responsible for taking reasonable

steps to safeguard the assets of the Company and of the

Group and in this regard to give proper consideration to

the establishment of appropriate internal control systems

with a view to preventing and detecting fraud and other

irregularities.

The Directors are required to prepare the Financial

Statements and to provide the auditors with every

opportunity to take whatever steps and undertake

whatever inspections they may consider to be appropriate

to enable them to give their independent audit opinion.

The Directors are of the view that they have discharged

their responsibilities as set out in this statement.

By Order of the Board of Sierra Cables PLC

P.R. Secretarial Services (Private) Limited

Secretaries

11th August 2017


52

Sierra Cables PLC

Annual Report of the Board of Directors on the Affairs of the CompanyThe Directors of Sierra Cables PLC (the Company) have

the pleasure in submitting their Report together with the

Audited Financial Statements of the Company and the

Audited Consolidated Financial Statements of the Group

for the year ended 31st March 2017.

Principal Activities

The principal activities of the Company are

manufacturing and selling of wires and cables. The

three subsidiaries, Sierra Power (Private) Limited, Sierra

Industries (Private) Limited and Sierra Cables East

Africa Limited are engaged in the power generation

to the National Grid, manufacture of UPVC pipes and

fittings and manufacture and sale of wires and cables

respectively. The two associate Companies, T & G Lanka

(Private) Limited and Tea Leaf Resort (Private) Limited

are diversified to manufacturing of Patch Cables and to

leisure sector.

Review of Operations

A review of the Company’s business and its performance

during the financial year is contained in the Chairman’s

message on pages 12 to 13 and MD / Chief Executive

Officer’s report on pages 14 to 15 of the Annual Report,

together with the Financial Statements which reflects the

state of affairs of the Company.

Financial Statements

The completed financial statements of the Group has

been duly certified by the person responsible for the

preparation of the financial statements of the Company

have been signed by two Directors on behalf of the Board

of Directors and the Auditors and confirm the Company

is in compliance with the requirements of the Companies

Act No. 07 of 2007. Details are given on pages 62 to 111.

Auditors Report

The Auditor’s Report on the Financial Statements is given

in page 61.

Financial Results

The Group made a Profit before Taxation of Rs. 347.67

million during the financial year compared to Rs. 273.43

million in 2015/16. The detailed results are given in the

Income Statement on page 62.

Dividends

The Company declared an interim dividend payment of

Rupees 0.25 per share on the 08th February 2017.

As required by Section 56(2) of the Companies Act No. 7

of 2007, the Board of Directors have confirmed that the

Company satisfies the solvency test immediately after the

payment of dividend and have obtained the certificate of

solvency from the Auditors.

Significant Accounting Policies

The significant accounting policies adopted in the

preparation of the financial statements are given in pages

70 to 81.

Property, Plant and Equipment

An analysis of the Property, Plant and Equipment of

the Company is disclosed in Note 13 of the Financial

Statements on pages 86 to 89.

Stated Capital

The Stated Capital of the Company as at 31st March

2017 was Rs. 894,565,898 and is represented by

537,512,430 issued and fully paid Ordinary Shares. There

was no change in the Stated Capital during the year.

Reserves

The group retained earnings and other reserves as at

31st March 2017 amounted to Rs. 784,307,937.


53

Sierra Cables PLC

Donations

No donations were made by the Company during the year

under review.

Capital Commitments

There were no material capital commitments as at the

reporting date.

Provision for the Taxation

Provision for the Taxation of the Company is disclosed in

Note 9 of the Financial Statements.

Statutory Payments

The Directors, to the best of their knowledge and belief,

are satisfied that all statutory payments due to relevant

authorities have been made by the Company.

Contingent Liabilities

There were no material contingent liabilities as at the

reporting date which require adjustments to or disclosure

in the Financial Statements.

Events After the Reporting Date

There were no material events occurring after the

reporting period that require adjustments to or disclosure

in the Financial Statements.

Risk Management and Internal Control

The details of the significant risks identified by the

Company and strategies and actions adopted in

managing them are set out in pages 31 to 33.

Going Concern

The Directors having made an assessment of the

Company’s operating conditions, financial position, risks

and future prospects have a reasonable expectation that

the Company has adequate resources to continue its

operations as a going concern in the foreseeable future.

Directors who held office during the Year

The Directors of the Company during the year were as

follows.

Mr. W. A. P. Perera - Non- Executive Director

Mr. D. S. Panditha - Executive Non-Independent

Director

Mr. E. A. D. T. B. Perera - Non- Executive Director

Mr. J. H. P. Rathnayake - Non- Executive Independent

Director

Ms. G. S. M. Irugalbandara - Non- Executive Director

Mr. D.N.N. Lokuge - Non- Executive Director

Eng. B. W. N. Rupasinghe - Non- Executive Independent

Director

Prof. A. K. W. Jayawardena - Non- Executive Independent

Director

Mr. M.N. Gunasekara - Non- Executive Independent

Director

Ms. S.N. Lokuge - Non- Executive Director

Appointments during the year

Ms. Shalini Nimendranie Lokuge with effect from 26th

May 2016

Resignations during the year

Mr. Don Nimal Nayana Lokuge with effect from 27th May

2016

Appointments after the conclusion of the year

Nil

Resignations after the conclusion of the year

Nil


54

Sierra Cables PLC

Directors who held office as at the end of the Accounting period

Mr. W. A. P. Perera

Mr. D. S. Panditha

Mr. E. A. D. T. B. Perera

Mr. J. H. P. Rathnayake

Ms. G. S. M. Irugalbandara

Eng. B. W. N. Rupasinghe

Prof. A. K. W. Jayawardena

Mr. M. N. Gunasekera

Ms. S. N. Lokuge

Directors retiring (at the Annual General Meeting)

1. To re-elect Mr. W.A.P. Perera, who retires by

rotation in terms of Articles 91 of the Articles

of Association of the Company as a Director of

the Company.

2. To re-elect Ms. G. S. M. Irugalbandara

, who retires by rotation in terms of Articles 91

of the Articles of Association of the Company

as a Director of the Company.

3. To re-elect Mr. J.H.P.Ratnayeke, who retires by

rotation in terms of Articles 91 of the Articles

of Association of the Company as a Director of

the Company.

Corporate Governance

The Board of Directors confirm that the Company is

compliant with section 7.10 of the Listing Rules of the

Colombo Stock Exchange.

An Audit Committee, Remuneration Committee and

Related Party Transactions Review Committee function

as Board sub committees with Directors who possess the

requisite qualifications and experience. The composition

of the said committees is as follows;

Audit Committee as at 31st March 2017





• Mr. B.N.W. Rupasinghe


Remuneration Committee as at 31st March 2017

• Prof. A.K.W. Jayawardane - Chairman




• Mr. M.N. Gunasekera


Related Party Transaction Review Committee as at 31st March 2017







Directors’ Interest Register

The Company maintains an Interest Register in terms

of the Companies Act No. 7 of 2007. The Directors

have made declarations and disclosed their interests

to the Board and those interests are recorded in the

interests register as provided for in Section 192(2) of the

Companies Act No. 7 of 2007.

Annual Report of the Board of Directors on the Affairs of the Company Contd.


55

Sierra Cables PLC

Directors Remuneration and Other Benefits of Directors

Directors’ remuneration in respect of the Company for the financial year 2016/17 is given in Note 35.2 to the Financial

Statements on page 104.

Directors’ Interest In Shares

The Company maintains an interest register in terms of the Companies Act No. 7 of 2007. The Directors have made

declarations and disclosed their interests to the Board and those are recorded in the interest register as provided for in

Section 192(2) of the Companies Act No. 7 2017.

NameNo. of Shares as at 31st

March 2017.No. of Shares as at 31st

March 2016

Mr. D.S. Panditha 17,501,297 17,022,950

Mr. W.A.P. Perera 3,920,510 3,920,510

Ms. G.S.M. Irugalbandara 1,709,800 1,709,800

Mr. F.A.W. Irugalbandara (Alternate Director) 200,010 200,010

Ms. S.N. Lokuge 100,000 Nil

Mr. D.N.N. Lokuge (Alternate Director) Nil 100,010

Mr. E.A.D.T.B. Perera 10 10

Prof. A.K.W. Jayawardena Nil Nil

Mr. B.W.N. Rupasinghe Nil Nil

Mr. M.N. Gunasekera Nil Nil

Mr. J.H.P. Ratnayake Nil Nil

Distribution of Shareholders as at 31st March 2017

The distribution and analysis of shareholdings were as follows;

Shareholding As at 31st March 2017 As at 31st March 2016

From ToNo. of

Shareholders No. of Shares %No. of

Shareholders No. of Shares %

1 - 1,000 14,162 12,965,505 2.41 14,331 1,317,744 2.45

1,001 - 10,000 6,759 24,582,174 4.58 6,925 16,740,876 3.12

10,001 - 100,000 984 32,974,996 6.13 1,073 36,216,841 6.74

100,001 - 10,00,000 217 61,434,164 11.43 217 61,702,179 11.48

10,00,001 - 10,000,000 29 405,555,591 75.45 33 409,675,090 77.22

Total 22,151 537,512,430 100.00 22,579 537,512,430 100.00


56

Sierra Cables PLC

As at 31st March 2017 As at 31st March 2016

NameNo. of



Resident 22,102 528,958,800 98.40 22,531 525,375,039 97.74

Non-Resident 49 8,553,630 1.60 48 12,137,391 2.26

Total 22,151 537,512,430 100.00 22,579 537,512,430 100.00


NameNo. of



Individual 21,832 149,516,700 27.82 22,258 152,378,444 28.35

Institutional 319 387,995,730 72.18 321 385,133,986 71.65

Total 22,151 537,512,430 100.00 22,579 537,512,430 100.00

20 Largest Shareholders of Equity


Name No. of Shares % No. of Shares %

1. Sierra Holdings (Pvt) Ltd 312,335,490 58.11 312,335,490 58.11

2. Mr. D.S. Panditha 17,501,297 3.26 17,401,297 3.24

3. People's Leasing Finance PLC / Carlines Holdings (Pvt) Ltd 12,135,290 2.26 11,885,290 2.21

4. Seylan Bank PLC / Carlines Holdings (Private) Limited 7,237,056 1.35 6,698,853 1.25

5. Seylan Bank PLC / Almas Organisation (Pvt) Limited 6,453,091 1.20 5,110,155 0.95

6. Mr. P.A.D.R.U. Pushpakumara 4,758,754 0.89 5,055,076 0.94

7. Mr. W.A.P. Perera 3,920,510 0.73 3,920,510 0.73

8. Tranz Dominion, L.l.C. 3,600,000 0.67 3,600,000 0.67

9. People's Leasing & Finance PLC / Hi Line Trading (Pvt) Ltd 3,135,233 0.58 3,450,000 0.64

10. Mr. A.B.S. Herath 3,130,000 0.58 2,985,000 0.56

11. Mr. T.L.M. Imtiaz 2,857,996 0.53 2,500,000 0.47

12. People's Leasing & Finance PLC / Mr. C.N. Jayasuriya 2,500,000 0.47 2,500,000 0.47

13. Mr. S.C. De Zoysa 2,500,000 0.47 2,428,162 0.45

14. Colombo Trust Finance PLC / Almas Organisation Private Ltd 2,436,638 0.45 2,275,800 0.42

15. Deutsche Bank Ag As Trustee To Capital Alliance Quantitative Equity Fund 2,223,194 0.41 2,223,194 0.41

16. Mr. M. Ilamperuma 2,150,000 0.40 2,150,000 0.4

17. Elgin Investments Limited 2,000,000 0.37 2,000,000 0.37

18. Mr. B.C. Ranaweera 2,000,000 0.37 1,786,493 0.33

19. Mrs. K.S. Rangedara 1,786,493 0.33 1,709,800 0.32

20 Ms. G.S.M. Irugalbandara 1,709,800 0.32 1,508,724 0.28

Annual Report of the Board of Directors on the Affairs of the Company Contd.


57

Sierra Cables PLC

Public Shareholding

The percentage of public shareholding as at the 31st of March 2017 was 37.46%

Shareholding and Share Information

The Company had 22,151 registered shareholders as at 31st March 2017. The information relating to earnings, net assets

per share and share trading, distribution and analysis of shareholding, the holding of the 20 largest shareholders, Directors

and Chief Executive Officer’s shareholding and public holding percentage is given on pages 10, 55 & 56 respectively.

Annual General Meeting

The notice of the Annual General Meeting is on page 116.

Auditors

The Financial Statements for the year ended 31st March 2017 have been audited by Messrs KPMG, (Chartered

Accountants) who offer themselves for reappointment. As far as the Directors are aware, the Auditors do not have any

relationship (other than that of an Auditor) with the Company other than those disclosed above. The Auditors also do not

have any interest in the Company.

The Auditors Messrs KPMG, Chartered Accountants were paid Rs. 1,000,000/- (2015/16 - Rs. 900,000/-) as Audit fees by the

Company.

A resolution relating to their reappointment and authorising the Directors to determine their remuneration will be

proposed at the Annual General Meeting.

By Order of the Board

Mr. W. A. P. Perera Mr. D. S. Panditha

Chairman / Director Executive Director

P.R. Secretarial Service (Private) Limited

Secretaries

11th August 2017


60

Sierra Cables PLC

Sierra Family


61

Sierra Cables PLC

Independent Auditors’ Report

TO THE SHAREHOLDERS OF SIERRA CABLES PLCReport on the Financial StatementsWe have audited the accompanying financial statements of Sierra Cables PLC (the “Company”), and the consolidated financial statements of the Company and its subsidiary (the “Group”), which comprise the statement of financial position as at 31st March 2017, and the statements of income, profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes comprising a summary of significant accounting policies and other explanatory information set out on page 62 to 111.

Board’s Responsibility for the Financial Statements The Board of Directors (“Board”) is responsible for the preparation of these financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Board, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31st March 2017, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Emphasis of MatterWithout qualifying our opinion, we draw your attention to Note 36 to the financial statements which indicate the existence of the material uncertainty which may cast significant doubt on the subsidiary’s ability to continue as a going concern and the steps taken by the Group. The financial statements do not include any adjustments that may necessary if the subsidiary is unable to continue as going concern.

Report on Other Legal and Regulatory Requirements As required by section 163 (2) of the Companies Act No. 07 of 2007, we state the following:

a) The basis of opinion and scope and limitations of the audit are as stated above.

b) In our opinion;

‒ we have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company.

‒ the financial statements of the Company give a true and fair view of its financial position as at 31st March 2017,and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

‒ the financial statements of the Company and the Group comply with the requirements of sections 151 and 153 of the Companies Act No. 07 of 2007.

Chartered AccountantsColombo11th August 2017


62

Sierra Cables PLC

Income StatementGroup Company

For the year ended 31st March Note2017

Rs.2016

Rs.2017

Rs.2016

Rs.

Revenue 5 4,044,449,473 3,036,010,858 3,724,981,774 2,865,490,013

Cost of Sales (3,165,556,059) (2,405,308,962) (2,880,335,542) (2,240,987,288)

Gross Profit 878,893,414 630,701,896 844,646,232 624,502,725

Other Income 6 26,903,100 51,222,884 26,902,525 50,991,533

Selling and Distribution Expenses (238,232,735) (188,820,709) (213,485,628) (167,281,847)

Administrative Expenses (156,899,782) (110,914,037) (155,481,754) (99,869,814)

Other Operating Expenses (11,801,897) (4,526,533) (57,500,000) (66,500,000)

Profit from Operations 7 498,862,100 377,663,501 445,081,375 341,842,597

Net Finance Costs 8 (152,067,334) (104,529,263) (123,600,270) (86,557,006)

Share of Profit of Equity-Accounted Investees, (Net of Tax) 17 874,224 293,942 - -

Profit Before Taxation 347,668,990 273,428,180 321,481,105 255,285,591

Income Tax Expense 9 (84,189,946) (78,501,676) (85,755,775) (79,364,029)

Profit from Continuing Operations 263,479,044 194,926,504 235,725,330 175,921,562

Discontinued Operation

Loss from Discontinued Operations 12 (1,965,557) (1,822,544) - -

Profit for the Year 261,513,487 193,103,960 235,725,330 175,921,562

Profit Attributable to :

Owners of the Company 267,515,510 199,934,090 235,725,330 175,921,562

Non - Controlling Interests (6,002,023) (6,830,130) - -


Basic Earnings Per Share 10 0.50 0.37 0.44 0.33

Figures in brackets indicate deductions.

The Financial Statement are to be read in conjunction with the related notes which form a part of these Financial

Statements of the Group set out on pages 70 to 111.


63

Sierra Cables PLC

Statement of Profit or Loss and Other Comprehensive Income

Group Company

For the year ended 31st March Note2017

Rs.2016

Rs.2017

Rs.2016

Rs.


Other Comprehensive Income/(Expense)

Net Change in Fair Value of Available-for-Sale Investments 170,023 (1,291,700) 170,023 (1,291,700)

Gains from Foreign Currency Translations 309,564 - - -

Actuarial Gain on Defined Benefit Obligation, (Net of Tax) 2,619,490 1,119,409 2,619,490 1,119,409

Other Comprehensive Income/(Expense) for the Year, Net of Tax 3,099,077 (172,291) 2,789,513 (172,291)

Total Comprehensive Income for the Year 264,612,564 192,931,669 238,514,843 175,749,271

Total Comprehensive Income Attributable to :

Owners of the Company 270,614,587 199,761,799 238,514,843 175,749,271

Non - Controlling Interests (6,002,023) (6,830,130) - -

Total Comprehensive Income for the Year 264,612,564 192,931,669 238,514,843 175,749,271





64

Sierra Cables PLC

Statement of Financial PositionGroup Company

As at 31st March Note2017

Rs.2016

Rs.2017

Rs.2016

Rs.

ASSETS

Non Current Assets

Property, Plant & Equipment 13 1,114,052,313 1,100,391,556 818,344,602 868,763,794

Intangible Assets 14 6,859,049 1,269,421 6,859,049 1,269,421

Investment Property 15 - - - -

Investments in Subsidiaries 16 - - 127,060,020 182,060,020

Investments in Equity Accounted Investees 17 3,621,185 2,746,962 3,300,000 5,800,000

Available for Sale Investments 18 29,142,315 44,755,691 29,142,315 44,755,691

Total Non Current Assets 1,153,674,862 1,149,163,630 984,705,986 1,102,648,926

Current Assets

Inventories 19 1,233,919,344 705,075,020 1,160,345,333 653,626,097

Trade and Other Receivables 20 1,673,026,254 1,045,452,578 1,362,539,187 863,144,766

Income Tax Recoverable 1,883 8,333,948 - 8,333,948

Amounts due from Related Companies 21 110,016,242 105,887,739 432,011,951 303,227,360

Cash in Hand and at Bank 22 78,771,458 80,234,093 73,481,406 73,005,443

Total Current Assets 3,095,735,191 1,944,983,378 3,028,377,877 1,901,337,614

Assets Classified as Held for Sale 12 166,624,096 165,854,862 18,000,000 18,000,000

Total Assets 4,416,034,139 3,260,001,870 4,031,083,863 3,021,986,540

EQUITY AND LIABILITIES

Equity

Stated Capital 23 894,565,898 894,565,898 894,565,898 894,565,898

Retained Earnings 416,195,733 280,438,841 462,992,865 359,026,151

Fair Value Reserve 17,892,855 17,722,832 17,892,855 17,722,832

Foreign Currency Translation Reserve 309,564 - - -

Revaluation Reserve 349,909,786 349,909,786 332,938,932 332,938,932

Total Equity Attributable to Equity Holders of the Company 1,678,873,836 1,542,637,357 1,708,390,550 1,604,253,813

Non-Controlling Interests (2,026,433) 3,975,590 - -

Total Equity 1,676,847,403 1,546,612,947 1,708,390,550 1,604,253,813


65

Sierra Cables PLC

Group Company

As at 31st March Note2017

Rs.2016

Rs.2017

Rs.2016

Rs.

Non Current Liabilities

Retirement Benefit Obligations 24 27,835,163 26,208,882 27,528,994 25,929,429

Deferred Tax Liabilities 25 176,014,092 186,911,342 151,468,004 160,774,382

Long Term Loans 26 71,484,209 142,263,091 56,613,998 106,604,820

Total Non Current Liabilities 275,333,464 355,383,315 235,610,996 293,308,631

Current Liabilities

Trade and Other Payables 28 972,584,651 412,316,074 861,280,482 305,965,657

Current Portion of Long Term Loans 26 106,906,114 98,817,384 48,646,677 68,818,200

Current Portion of Lease Liability 27 - - - -

Amounts due to Related Companies 29 - - 85,817 19,838

Import Demand Loans 30 1,206,197,811 768,178,333 1,065,874,913 714,097,468

Income Tax Payable 73,512,534 - 73,512,534 -

Bank Overdraft 22 98,056,157 72,104,387 37,681,897 35,542,771

Total Current Liabilities 2,457,257,267 1,351,416,178 2,087,082,320 1,124,424,096

Liabilities Directly Associated with Assets Classified as Held for Sale

12 6,596,000 6,589,430 - -

Total Liabilities 2,739,186,731 1,713,388,923 2,322,693,316 1,417,732,727

Total Equity and Liabilities 4,416,034,134 3,260,001,870 4,031,083,864 3,021,986,540

Net Asset Value per Share 3.12 2.87 3.18 2.98




It is certified that the Financial Statements have been prepared in compliance with the requirements of the Companies Act

No 07 of 2007.

Mervyn De Silva

Chief Financial Officer.

The Board of Directors is responsible for the preparation and presentation of the Financial Statements.

Approved and signed for and on behalf of the Board of Directors.

Priyantha Perera Shamendra Panditha

Chairman Managing Director

11th August 2017

Colombo


66

Sierra Cables PLC

Consolidated Statement of Changes in Equity

Attributable to Owners of the Company

For the year ended 31st March

Group

Stated Capital

Rs.

Revaluation

ReserveRs.

Foreign Currency

Translation Reserve

Rs.

Fair ValueReserve

Rs.

RetainedEarnings

Rs. Total

Rs.

Non Controlling

InterestRs.

Total Equity

Rs.

Balance as at 1st April 2015 894,565,898 349,909,786 - 19,014,532 186,887,828 1,450,378,044 10,805,720 1,461,183,764

Profit / (Loss) for the Year - - - - 199,934,090 199,934,090 (6,830,130) 193,103,960


Net Change in Fair Value of Available-for-

Sale Financial Assets - - - (1,291,700) - (1,291,700) - (1,291,700)

Actuarial Loss on Retirement Benefit

Obligation, Net of Tax - - - - 1,119,409 1,119,409 - 1,119,409

Total Comprehensive Income / (Expense)

for the Year - - - (1,291,700) 201,053,499 199,761,798 (6,830,130) 192,931,668

Transactions with Owners, Recognised

Directly in Equity

Dividend Paid - Ordinary Shares - - - - (107,502,486) (107,502,486) - (107,502,486)

Total Transactions with Owners of the

Company - - - - (107,502,486) (107,502,486) - (107,502,486)

Balance as at 31st March 2016 894,565,898 349,909,786 - 17,722,832 280,438,841 1,542,637,356 3,975,590 1,546,612,947

Balance as at 1st April 2016 894,565,898 349,909,786 - 17,722,832 280,438,841 1,542,637,356 3,975,590 1,546,612,947

Profit / (Loss) for the Year - - - - 267,515,510 267,515,510 (6,002,023) 261,513,487

Other Comprehensive Income / (Expense)


Sale Financial Assets - - - 170,023 - 170,023 - 170,023

Actuarial Gain on Retirement Benefit

Obligation, Net of Tax - - - - 2,619,490 2,619,490 - 2,619,490

Foreign Currency Translation Gain - - 309,564 - - 309,564 - 309,564


for the Year - - 309,564 170,023 270,135,000 270,614,587 (6,002,023) 264,612,564


Directly in Equity

Dividend Paid - Ordinary Shares - - - - (134,378,108) (134,378,108) - (134,378,108)


Company - - - - (134,378,108) (134,378,108) - (134,378,108)

Balance as at 31st March 2017 894,565,898 349,909,786 309,564 17,892,855 416,195,733 1,678,873,835 (2,026,433) 1,676,847,403





67

Sierra Cables PLC

Statement of Changes in EquityFor the year ended 31st March

Company

Stated Capital

Rs.

Revaluation Reserve

Rs.

Fair Value Reserve

Rs.

Retained Earnings

Rs. Total

Rs.

Balance as at 1st April 2015 894,565,898 332,938,932 19,014,532 289,487,666 1,536,007,028

Profit for the Year - - - 175,921,562 175,921,562



Sale Financial Assets - - (1,291,700) - (1,291,700)


Obligation, Net of Tax - - - 1,119,409 1,119,409


for the Year - - (1,291,700) 177,040,971 175,749,271


Directly in Equity

Dividend Paid - Ordinary Shares - - - (107,502,486) (107,502,486)


Company - - - (107,502,486) (107,502,486)

Balance as at 31st March 2016 894,565,898 332,938,932 17,722,832 359,026,151 1,604,253,813

Balance as at 1st April 2016 894,565,898 332,938,932 17,722,832 359,026,151 1,604,253,813

Profit for the Year - - - 235,725,330 235,725,330



Sale Financial Assets - - 170,023 - 170,023


Obligation, Net of Tax - - - 2,619,490 2,619,490

Total Comprehensive Income for the Year - - 170,023 238,344,820 238,514,843


Directly in Equity

Dividend Paid - Ordinary Shares - - - (134,378,108) (134,378,108)


Company - - - (134,378,108) (134,378,108)

Balance as at 31st March 2017 894,565,898 332,938,932 17,892,855 462,992,863 1,708,390,548





68

Sierra Cables PLC

Statement of Cash FlowsGroup Company

For the year ended 31st March2017

Rs.2016

Rs.2017

Rs.2016

Rs.

Cash Flow from Operating Activities

Profit Before tax from continuing operations 346,794,766 273,134,238 321,481,105 255,285,591

Loss Before tax from discontinued operations (1,965,557) (1,822,544) - -

Adjustments for:

Depreciation 85,216,844 83,890,706 68,632,183 67,600,893

Amortization of Intangible Asset 2,148,915 977,166 2,148,915 977,166

Net Gain on Translation of Foreign Currency (1,931,470) - - -

Depreciation of Investment Property - 68,446 - 68,446

Provision for Impairment of Trade Receivables 34,228,581 24,350,525 29,438,139 9,532,904

Provision for Impairment of Investment in Subsidiary - - 55,000,000 62,000,000

Gain on Sale of Property, Plant and Equipment - (46,690,847) - (46,690,847)

Gain on Disposal of Investment Property - (8,105,497) - (8,105,497)

Gain on Disposal of Available For Sale Investment (554,968) - (554,968) -

Provision for Impairment of Investment in Associates - - 2,500,000 -

Written off of Finished Goods 44,296,346 - 44,296,346 -

Provision for Obsolete Inventories 2,119,931 9,669,251 - 9,669,251

Provision for Retirement Benefit Obligation 5,790,171 5,356,866 5,763,455 5,588,217

Interest Expenses 153,720,896 107,297,800 125,335,581 89,325,542

Interest Income (401,440) (2,768,536) (391,517) (2,768,536)

Dividend Income (134,998) (523,091) (134,998) (523,091)

Operating Profit Before Working Capital Changes 669,328,017 444,834,483 653,514,241 441,960,039

Increase in Inventories (573,140,666) (98,949,334) (551,015,580) (105,417,501)

Increase in Trade and Other Receivables (664,157,332) (68,297,294) (528,304,713) (43,055,547)

(Increase) / Decrease in Dues from Related Parties (4,119,994) (15,534,232) (128,784,951) 1,845,145

Increase in Trade and Other Payables 557,168,584 80,971,580 555,400,639 36,734,360

Cash Generated from / (Used in) Operations (14,921,391) 343,025,203 809,996 332,066,496

Interest Paid (150,620,896) (107,297,800) (125,335,581) (89,325,542)

Income Tax Paid (26,050,407) (86,259,001) (26,048,502) (86,098,310)

Retirement Benefit Paid (2,093,801) (4,395,438) (2,093,801) (4,395,438)

Net Cash Flows Generated from / (Used in) Operating Activities (193,686,474) 145,072,964 (152,667,888) 152,247,206


69

Sierra Cables PLC

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

Cash Flows from Investing Activities

Interest Received 401,440 2,768,536 391,517 2,768,536

Dividend Received 134,998 523,091 134,998 523,091

Acquisition of Property, Plant and Equipment (107,129,978) (59,397,315) (26,479,382) (56,016,332)

Acquisition of Intangible Assets - (637,089) - (637,089)

Proceeds from Disposal of Property, Plant and Equipment - 49,866,455 - 49,866,455

Proceeds from Disposal of Investment Property - 22,000,000 - 22,000,000

Investment in Available of Sale Investments - (15,783,398) - (15,783,398)

Investment in Subsidiary - - - (28,780,000)

Proceeds from Disposal of Available of Sale Investments 16,338,367 - 16,338,367 -

Net Cash Used In Investing Activities (90,255,173) (659,720) (9,614,500) (26,058,738)

Cash Flows from Financing Activities

Proceed from Interest-Bearing Borrowing 2,605,221,880 2,116,584,799 2,329,593,559 2,035,681,382

Repayment of Interest-Bearing Borrowing (2,229,892,554) (2,150,296,499) (2,047,978,459) (2,056,621,964)

Repayment of Lease - (2,687,966) - (2,687,966)

Dividend Paid (120,995,875) (107,502,486) (120,995,875) (107,502,486)

Net Cash Flows Generated From/(Used In) Financing Activities 254,333,451 (143,902,152) 160,619,225 (131,131,034)

Net Increase/(Decrease) in Cash and Cash Equivalents (27,414,729) 511,092 (1,663,163) (4,942,565)

Cash and Cash Equivelents Classified as Asset Held For Sale 326 (639) - -

Cash and Cash Equivalents at the Beginning of the Year 8,129,706 7,619,253 37,462,672 42,405,237

Cash and Cash Equivalents at the End of the Year (19,284,697) 8,129,706 35,799,509 37,462,672

Analysis of Cash & Cash Equivalents

Cash in Hand and at Bank 78,771,458 80,234,093 73,481,406 73,005,443

Bank Overdraft (98,056,157) (72,104,387) (37,681,897) (35,542,771)

(19,284,699) 8,129,706 35,799,509 37,462,672





70

Sierra Cables PLC

1. REPORTING ENTITY

1.1. Domicile and Legal Form

Sierra Cables PLC is a public limited liability Company

incorporated and domiciled in Sri Lanka. The registered

office of the Company is located at 112, Havelock Road,

Colombo 05 and principal place of business is located at

39/1A, Galwarusawa Road, Korathota, Kaduwela.

The consolidated financial statements of the Company

as at and for the year ended 31st March 2017 comprise

theCompany and its Subsidiaries (together referred as

the“Group” individually as Group entities) and the group

interestin associates.

Sierra Cables being a part of a large conglomerate is

also a Group on its own. The principal activity of the

Company is manufacture and sale of wires and cables.

The three subsidiaries, Sierra Power (Private) Limited,

Sierra Industries (Private) Limited and Sierra Cables East

Africa Limited are engaged in the power generation

to the National Grid, manufacture of UPVC pipes and

fittings and manufacture and sale of wires and cables

respectively. The two associate Companies, T & G Lanka

(Private) Limited and Tea Leaf Resort (Private) Limited

are diversified to manufacturing of Patch Cables and to

leisure sector.

All the Companies in the Group have a common financial

year, which ends on 31st March other than Sierra Cables

East Africa Limited which has been prepared up to 31st

December as per their reporting requirements.

2. BASIS OF PREPARATION

2.1. Statement of Compliance

The consolidated financial statements have been

prepared in accordance with the Sri Lanka Accounting

Standards (SLFRSs/LKASs) promulgated by the Institute

of Chartered Accountants of Sri Lanka (ICASL) and

comply with the requirement of Companies Act No.07 of

2007.

The consolidated financial statements were authorised

for issue by the Board of Directors on11th August 2017.

2.2. Basis of Measurement

The Financial Statements have been prepared on the

historical cost basis except for the following material

items in the statement of financial position.

• Available-for-Sale Financial Assets are measured at fair

value;

• Liability for Defined Benefit Obligations is carried at the

present value of the defined benefit obligations.

• Land, Buildings and Plant and Machinery are measured

at cost at the time of acquisition and subsequently at

revalued amounts, which are the fair values at the date

of revaluation.

The Directors have made an assessment of the Group’s

ability to continue as a going concern in the foreseeable

future and they do not foresee a need for liquidation or

cessation of trading.

2.3. Functional and Presentation Currency

The Financial Statements are presented in Sri Lankan

Rupees which is the Group’s functional currency. All

financial information presented in Sri Lankan Rupees

has been rounded to the nearest rupee, unless stated

otherwise.

2.4. Use of Estimates and Judgments

The preparation of Financial Statements in conformity

with Sri Lanka Accounting Standards requires

management to make judgments, estimates and

assumptions that affect the application of accounting

policies and the reported amounts of assets, liabilities,

income and expenses. Actual results may differ from

these estimates.

Notes to the Financial Statements


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Sierra Cables PLC

Estimates and underlying assumptions are reviewed

on an ongoing basis. Revisions to accounting estimates

are recognized in the period in which the estimates are

revised and in any future periods affected.

Information about critical estimates and judgments

in applying accounting policies that have the most

significant effect on the amounts recognized in the

financial statements is provided in the following notes.

• Identification, measurement and assessment of

impairment

• Recognition and measurement of financial instruments

• Retirement Benefit Obligations

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied

consistently to all periods presented in these consolidated

financial statements, and have been applied consistently

by Group entities.

3.1. Basis of Consolidation

(a) Business Combination

Business combinations are accounted for using the

acquisition method as at the acquisition date when

control is transferred to the Group. Control is the power

to govern the financial and operating policies of an entity

so as to obtain benefits from its activities. In assessing

control, the Group takes into consideration potential

voting rights that are currently exercisable.

The Group measures goodwill at the acquisition date as:

• The fair value of the consideration transferred; plus

• The recognised amount of any non-controlling interests

in the acquire; plus

• If the business combination is achieved in stages, the

fair value of the pre-existing equity interest in the

acquire; less

• The net recognised amount (generally fair value) of the

identifiable assets acquired and liabilities assumed.

• When the excess is negative, a bargain purchase gain is

recognised immediately in profit or loss.

(b) Non - Controlling Interests

For each business combination, the Group elects to

measure any non-controlling which are generally at fair

value.

Changes in the Group’s interest in a subsidiary that

do not result in a loss of control are accounted for as

transactions with owners in their capacity as owners.

Adjustments to non-controlling interests are based on a

proportionate amount of the net assets of the subsidiary.

No adjustments are made to goodwill and no gain or loss

is recognised in profit or loss.

(c) Subsidiaries

Subsidiaries are entities controlled by the Group. The

financial statements of subsidiaries are included in the

Consolidated Financial statements from the date that

control commences until the date that control ceases.

(d) Loss of Control

On the loss of control, the Group derecognises the assets

and liabilities of the subsidiary, any non-controlling

interests and the other components of equity related to

the subsidiary. Any surplus or deficit arising on the loss of

control is recognised in profit or loss. If the Group retains

any interest in the previous subsidiary, then such interest

is measured at fair value at the date that control is lost.

Subsequently it is accounted for as an Equity-Accounted

Investee or as an Available-for-Sale Financial Asset

depending on the level of influence retained.


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Sierra Cables PLC

(e) Equity Accounted Investees (Investments In

Associates)

Associates are those entities in which the Group has

significant influence but not control, over the financial

and operating policies, Significant influence is presumed

to exist when the Group holds between 20% and 50%

of the voting power of another entity. Investments in

Associates are accounted for using the Equity Method

and are recognised initially at cost. The cost of the

investment includes transaction costs.

The consolidated financial statements include the Group’s

share of the profit or loss and other comprehensive

income of equity accounted investees, from the date

that significant influence commences until the date that

significant influence ceases. When the Group’s share

of losses exceeds its interest in an equity-accounted

investee, the carrying amount of the investment,

including any long-term interests that form part thereof,

is reduced to zero, and the recognition of further losses

is discontinued except to the extent that the Group has

an obligation or has made payments on behalf of the

investee.

At each reporting date, the Group determines whether

there is objective evidence that the investment in

associate is impaired. If there is such evidence, the Group

calculates the amount of impairment as the difference

between the recoverable amount of the associate and its

carrying value, and then recognises the loss as “Share of

profit of an associate” in the income statement.

f) Intra-Group Transactions

Pricing policies of all intra-group sales are identical to

those adopted for normal trading transactions, which are

at market prices.

(g) Transactions Eliminated on Consolidation

Intra group balances and transactions, and any

unrealised income and expenses arising from intra group

transactions, are eliminated in preparing the consolidated

financial statements, Unrealised gains arising from

transactions with equity-accounted investees are

eliminated against the investment to the extent of the

Group’s interest in the investee. Unrealised losses are

eliminated in the same way as unrealised gains but only

to the extent that there is no evidence of impairment.

3.2. Foreign Currency

3.2.1 Foreign Currency Transactions

Transactions in foreign currencies are translated to the

respective functional currencies of Group entities at

exchange rates at the dates of the transactions. Monetary

assets and liabilities denominated in foreign currencies

at the reporting date are re-translated to the functional

currency at the exchange rate at that date.

Non monetary assets and liabilities denominated in

foreign currencies that are measured at fair value are

re-translated to the functional currency at the exchange

rate at the date that the fair value was determined. Non

monetary items in a foreign currency that are measured

based on historical cost are translated using the exchange

rate at the date of the transaction.

Foreign currency differences arising on retranslation are

recognised in profit or loss.

3.2.2 Foreign Operations

The results and financial position of overseas operations that

have a Functional Currency different from the Company’s

Presentation Currency are translated into the Company’s

Presentation Currency as follows:

• Assets and liabilities, including goodwill and fair value

adjustments arising on acquisition, are translated at the

rates of exchange ruling as at the Reporting date.

• Income and expenses are translated at the average

exchange rate for the period.

Notes to the Financial Statements Contd.


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Sierra Cables PLC

The exchange differences arising on translation for

Consolidation are recognised in Other Comprehensive

Income and accumulated in the Foreign Currency

Translation Reserve (Translation Reserve), which is a

separate component of Equity, except to the extent that

the translation difference is allocated to the NCI.

When a Foreign Operation is disposed of such that the

control is lost, the cumulative amount in the Translation

Reserve related to that foreign operation is reclassified to

profit or loss as part of the gain or loss on disposal. If the

Group disposes of only part of its interest in a subsidiary

that includes a Foreign Operation while retaining control,

then the relevant proportion of the cumulative amount

of the Translation Reserve is reattributed to NCI.

Any goodwill arising on the acquisition of a foreign

operation and any fair value adjustments to the carrying

amounts of assets and liabilities arising on the acquisition

are treated as assets and liabilities of the foreign

operation.

3.3. Assets and Bases of Their Valuation

3.3.1 Property, Plant and Equipment

(a) Recognition and Measurement

All items of property, plant and equipment are initially

recorded at cost. Where items of property, plant and

equipment are subsequently revalued, the entire class

of such assets is revalued. Revaluations are made with

sufficient regularity to ensure that their carrying amounts

do not differ materially from their fair values at the

reporting date.

Subsequent to the initial recognition of the asset at cost,

the revalued property, plant and equipment are carried

at revalued amounts less accumulated depreciation

thereon and accumulated impairment losses. The Group

applies revaluation model to land, building and plant

and machinery and cost model to the remaining assets

under property, plant and equipment which are stated

at historical cost less accumulated depreciation less

accumulated impairment losses, if any.

The cost of an item of property, plant and equipment

comprise its purchase price and any directly attributable

costs of bringing the asset to working condition for its

intended use. The cost of self-constructed assets includes

the cost of materials, direct labour, any other costs

directly attributable to bringing the asset to the working

condition for its intended use and capitalised borrowing

costs. This also includes cost of dismantling and removing

the items and restoring in the site on which they are

located. When parts of an item of property, plant and

equipment have different useful lives, they are accounted

for as separate items (major components) of property,

plant and equipment.

Any gain or loss on disposal of an item of property, plant

and equipment (calculated as the difference between the

net proceeds from disposal and the carrying amount of

the item) is recognised in profit or loss.

(b) Subsequent Costs

The cost of replacing part of an item of property, plant

and equipment is recognized in the carrying amount

of the item if it is probable that the future economic

benefits embodied within the part will flow to the

company and its cost can be measured reliably. The

carrying amount of the replaced part is derecognized.

The costs of the day to day servicing of property,

plant and equipment are recognized in profit or loss as

incurred.

(c) Derecognition

The carrying amount of an item of property, plant and

equipment is derecognized on disposal or when no future

economic benefits are expected from its use or disposal.

Any gain or loss on disposal of an item of property, plant

and equipment calculated as the difference between the

net proceeds from disposal and the carrying amount of

the item is recognized within other income in profit or

loss.


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Sierra Cables PLC

(d) Depreciation

Items of property, plant and equipment are depreciated

on a straight-line basis in profit or loss over the estimated

useful lives of each component. Leased assets are

depreciated over the shorter of the lease term and their

useful lives unless it is reasonably certain that the Group

will obtain ownership by the end of the lease term.Land is

not depreciated. Items of property, plant and equipment

are depreciated from the date that they are installed and

are ready for use, or in respect of internally constructed

assets, from the date that the asset is completed and

ready for use.

The estimated useful lives for the current and

comparative years of significant items of property, plant

and equipment are as follows:

Asset Category Useful Life

(Years)

Depreciation

Rate (%)

Building 20-25 4-5

Plant and Machinery 10-20 5-10

Factory Equipment 5 20

Furniture Fittings 5 20

Motor Vehicles 5 20

Offices and Computer

Equipment 5 20

Depreciation of an asset begins when it is available for

use where as depreciation of an asset ceases at the earlier

of the date that the asset is classified as held for sale and

the date that the asset is derecognized.

Depreciation method, useful lives and residual values

are reviewed at each financial year end and adjusted if

appropriate.

(e) Revaluation Policy

The Company’s land, buildings, plant and machinery,

factory equipment are revalued with sufficient regularity

once in five years. The revaluation surplus is accounted in

the revaluation reserve.

3.3.2 Intangible Assets and Goodwill

(a) Intangible Assets

An Intangible Asset is recognized if it is probable that

economic benefits are attributable to the assets will flow

to the Group and cost of the assets can be measured

reliably and carried at cost less accumulated amortization

and accumulated impairment losses.

(b) Goodwill

Goodwill that arises on the acquisition of subsidiaries is

presented with intangible assets. For the measurement

of goodwill at initial recognition, see Note 3.1 (a).

Subsequent measurement

Goodwill is measured at cost less accumulated

impairment losses. In respect of equity accounted

investees, the carrying amount of goodwill is included

in the carrying amount of the investment, and any

impairment loss is allocated to the carrying amount of

the equity accounted investee as a whole.

(c) Computer Software

All computer software cost incurred, which are not an

integral part of the related hardware, which can be clearly

identified, reliably measured and its probable that they

will lead to future economic benefits, are included in the

Statement of Financial Position under the category of

intangible assets.

Subsequent Expenditure

Subsequent expenditure is capitalized only when it

increases the future economic benefits embodied in the

specific asset to which it relates. All other expenditure is

recognised in profit or loss as incurred.

Amortization

Intangible assets are amortized on a straight-line basis

in profit or loss over their estimated useful lives from the

date that they are available for use. The estimated useful

lives for the current and comparative years are as follows:



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Sierra Cables PLC

Asset Category Useful Life

(Years)

Depreciation

Rate (%)

Computer Software 5 20

Amortization methods, useful lives and residual values

are reviewed at each reporting date and adjusted if

appropriate.

3.3.3 Leased Assets

Leases in terms of which the Group assumes substantially

all of the risks and rewards of ownership are classified

as finance leases on initial recognition, the leased asset

is measured at an amount equal to the lower of its

fair value and the present value of the minimum lease

payments. Subsequent to initial recognition, the asset is

accounted for in accordance with the accounting policy

applicable to that asset. Other leases are operating leases

and are not recognized in the Group’s statement of

financial position.

3.3.4 Investment Property

Investment properties are properties held either to

earn rental income or for capital appreciation or both

but not for sale in the ordinary course of business, used

in the production or supply of goods or services for

administrative purposes.

Investment property is recognized, if it is probable that

future economic benefits that are associated with the

investment property, will flow to the Group and cost of

the investment property can be reliably measured.

An investment property is measured initially at its

cost. The cost of a purchased investment property

comprises of its purchase price and directly attributable

expenditure, the cost of the self-constructed investment

property is its cost at the date of when the construction

or development is completed. The Group applies the cost

model for investment properties in accordance with LKAS

40 – “Investment property.”

3.3.5 Inventories

Inventories are measured at the lower of cost and

net realizable value. The cost of inventories includes

expenditure incurred in acquiring the inventories,

production or conversion costs, and other costs

incurred in bringing them to their existing location and

condition. In the case of manufactured inventories and

work in progress, cost includes an appropriate share

of production overheads based on normal operating

capacity. Net realizable value is the estimated selling price

in the ordinary course of business less the estimated

costs of completion and the estimated costs necessary to

make the sales.

The costs incurred in bringing inventories to its present

location and condition, are accounted for as follows:

Raw Materials

- At actual cost, on Weighted Average basis.

Finished Goods and Work-in-Progress

- At actual cost, on Weighted Average for work in

progress and finished goods.

3.3.6 Impairment of Non-Financial Assets

The carrying amounts of the group’s non-financial assets,

other than inventories are reviewed at each reporting

date to determine whether there is any indication of

impairment. If any such indication exists, then the asset’s

recoverable amount is estimated. An impairment loss

isrecognised if the carrying amount of an assets or cash

generating unit (CGU) exceeds its recoverable amount.

The recoverable amount of an asset or CGU is the greater

of its value in use and its fair value less costs to sell. In

assessing value in use, the estimated future cash flows are

discounted to their present value using a pre-tax discount

rate that reflects current market assessments of the time

value of money and the risks specific to the asset or CGU.


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Sierra Cables PLC

For impairment testing, assets are grouped together into

the smallest group of assets that generates cash inflows

from continuing use that are largely independent of the

cash inflows of other assets or CGUs.

Impairment losses are recognised in the statement of

comprehensive income. Impairment losses recognised

in respect of CGUs are allocated first to reduce the

carrying amount of any goodwill allocated to CGU (if

any) and then to reduce the carrying amounts of other

assets in the CGU (group of CGUs) on pro rata basis. An

impairment loss in respect of goodwill is not reversed. For

other assets , an impairment loss is reversed only to the

extent that the assets carrying amount does not exceed

the carrying amount that would have been determined ,

net of depreciation or amortisation, if no impairment loss

had been recognised.

3.3.7 Financial Instruments

(i) Non Derivative Financial Assets

The group initially recognizes loans and receivables on

the date that they are originated. All other financial assets

are recognized initially on the trade date at which the

group becomes a party to the contractual provisions of

the instrument.

A financial asset is measured initially at fair value plus,

in the case of assets not at fair value through profit or

loss, transaction costs that are directly attributable to its

acquisition or issue.

The group derecognises a financial asset when the

contractual rights to the cash flows from the asset

expire; it transfers the right to receive the contractual

cash flows on the financial asset in a transaction in which

substantially all the risks and rewards of ownership of the

financial asset are transferred. Any interest in transferred

financial assets that is created or retained by the Group is

recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net

amount presented in the statement of financial position

when, and only when, the Company has a legal right to

set off the amounts and it intends either to settle on a

net basis or to realise the asset and settle the liability

simultaneously.

The Group classifies non derivative financial assets into

the following categories;

• Loans and Receivables

• Cash and Cash Equivalents

• Available for Sale Financial Assets

a. Loans and Receivables

Loans and receivables are financial assets with fixed or

determinable payment that are not quoted in an active

market. Such assets are recognised at fair value plus any

directly attributable transaction costs. Subsequent to

initial recognition loans and receivables are measured at

amortised cost using the effective interest method, less

any impairment losses.

b. Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances

and call deposits with maturities of three months or

less from the acquisition date that are subject to an

insignificant risk of changes in their fair value and are

used by the Group in the management of its short-term

commitments.

c. Available for Sale Financial Assets

Available-for-sale financial assets are financial assets that

are designated as available for sale and are not classified

in any other categories. Subsequent to initial recognition,

they are measured at fair value and changes therein,

other than impairment losses on available for sale equity

instruments are recognised in other comprehensive



77

Sierra Cables PLC

income and presented within equity in the fair value

reserve. When an investment is derecognised, the

cumulative gain or loss in other comprehensive incomes

transferred to profit or loss.

Available for sales financial assets comprise of Investment

in Equity Shares and Treasury Bills.

(ii) Non Derivative Financial Liabilities

The Group recognizes financial liabilities initially on the

trade date at which the Group becomes a party to the

contractual provisions of the instrument.

The Group classifies financial liabilities into other financial

liabilities category. Such finance liabilities are recognized

initially at fair value plus any directly attributable

transaction costs. Subsequent to initial recognition, these

financial liabilities are measured at amortised cost using

the effective interest method.

The Group derecognizes a financial liability when its

contractual obligations are discharged, cancelled or

expired.

Other financial liabilities comprise Trade Payables, Other

Liabilities and Bank Borrowings.

(iii) Share Capital

Ordinary shares are classified as equity. Incremental costs

directly attributable to the issue of ordinary shares are

recognised as a deduction from Equity, net of any tax

effects.

(iv) Amortized Cost Measurement

The amortised cost of a financial asset or liability is

the amount at which the financial asset or liability

is measured at initial recognition, minus principal

repayments and any impairment and plus/minus the

cumulative amortization using the effective interest

method of any difference between the initial amount

recognised and the maturity amount.

(v) Fair Value Measurement

Fair value is the amount for which an asset could be

exchanged, or a liability settled, between knowledgeable,

willing parties in an arm’s length transaction on the

measurement date.

The fair value of financial instruments that are traded in

an active market at each reporting date is determined

by reference to quoted market prices or dealer price

quotations, without any deduction for transaction costs.

For financial instruments not traded in an active

market, the fair value is determined using appropriate

valuation techniques. Such techniques may include

using recent arm’s length market transactions; reference

to the current fair value of another instrument that is

substantially the same; a discounted cash flow analysis or

other valuation models.

(vi) Impairment

The group assesses at each reporting date whether there

is any objective evidence that financial assets or group of

financial assets is impaired. A financial asset or a group

of financial assets is deemed to be impaired if, and only

if there is objective evidence of impairment as a result

of one or more events that has occurred after the initial

recognition of the asset and that loss event has an impact

on the estimated future cash flows of the financial asset

that can be estimated reliably

Objective evidence that a financial assets are impaired

includes default or delinquency by a debtor, restructuring

of an amount due to the company on terms that the

company would not consider otherwise, indications

that a debtor or issuer will enter bankruptcy, adverse


78

Sierra Cables PLC

changes in the payment status of borrowers or issuers,

economic conditions that correlate with defaults or the

disappearance of an active market for a security.

Impairment Losses on Available for Sale Financial Assets

Impairment losses on available-for-sale financial assets

are recognised by reclassifying the losses accumulated

in the fair value reserve in equity to profit or loss. The

cumulative loss that is reclassified from equity to profit

or loss is the difference between the acquisition cost, net

of any principal repayment and amortisation, and the

current fair value, less any impairment loss recognised

previously in profit or loss. Changes in cumulative

impairment losses attributable to application of the

effective interest method are reflected as a component of

interest income.

If, in a subsequent period,the fair value of an impaired

available-far-sale debt security increases and the increase

can be related objectively to an event occurring after the

impairment loss was recognised, then the impairment loss

is reversed, with the amount of the reversal recognised

in profit or loss. However, any subsequent recovery in the

fair value of an impaired available-far-sale equity security

is recognised in other comprehensive income

3.3.8 Defined Benefit Plan

A defined benefit plan is a post-employment benefit

plan other than a defined contribution plan. The Group’s

net obligation in respect of defined benefit plans is

calculated by estimating the amount of future benefit

that employees have earned in return for their service in

the current and prior periods; that benefit is discounted

to determine its present value.

The retirement benefit obligation of the group is based

on the actuarial valuation using Projected Unit Credit

(PUC) methods as recommended by Sri Lanka Accounting

Standard (LKAS 19) Employee Benefits. The calculation

is performed by independent Actuary using the projected

unit credit method. The assumptions based on which the

results of the actuarial valuation was determined, are

included in Note 23.2 to the Financial Statements.

The Group recognizes all actuarial gains and losses arising

from the defined benefits plans immediately in the other

comprehensive income. The liability is disclosed under

Non-current liabilities in the Statement of Financial

Position and not externally funded.

However, as per the Payment of Gratuity Act No. 12

of 1983 the liability to an employee arises only on

completion of 5 years of continued service.

Defined Contribution Plans – Employees’ Provident Fund

and Employee Trust Fund

All employees who are eligible for Employees’ Provident

Fund Contributions and Employees’ Trust Fund

Contributions are covered by relevant contributions

funds in line with the relevant statutes. Employer’s

contributions to the defined contribution plans are

recognized as an expense in profit or loss when incurred.

3.3.9 Provisions

A provision is recognized if, as a result of a past event

the Group has a present legal or constructive obligation

that can be estimated reliably, and it is probable that an

outflow of economic benefit will be required to settle the

obligation.

3.4 Statement of Comprehensive Income

(a) Revenue

Revenue is recognized to the extent that it is probable

that the economic benefits will flow to the Group and

the revenue and the associated costs incurred or to be

incurred can be reliably measured. Revenue is measured

at the fair value of the consideration received or

receivable, net of trade discounts and sales taxes.



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Sierra Cables PLC

(i) Sale of Goods

Revenue from the sale of goods in the course of

ordinary activities is measured at the fair value of the

consideration received or receivable, net of returns, trade

discounts and volume rebates. Revenue is recognised

when persuasive evidence exists, that the significant risks

and rewards of ownership have been transferred to the

customer, recovery of the consideration is probable, the

associated costs and possible return of goods can be

estimated reliably, there is no continuing management

involvement with the goods and the amount of revenue

can be measured reliably.

(ii) Dividend Income

Dividend income recognized when the right to receive the

dividend is established.

(iii) Interest Income

Interest income is recognized on an accrual basis unless

collection is in doubt.

(iv) Gains and Losses

Net gains and losses of a revenue nature arising from

the disposal of property, plant and equipment and other

non-current assets, including investments, are accounted

for in the statement of comprehensive income, after

deducting from the proceeds on disposal, the carrying

amount of such assets and the related selling expenses.

(v) Other Income

Other income is recognized on an accrual basis

(b) Expenditure Recognition

(i) Operating Expenses

All expenses incurred in day to day operations of the

business and in maintaining the property, plant and

equipment in a state of efficiency has been charged to

the statement of comprehensive income in arriving at

the profit for the year. Provision has also been made for

impairment of financial assets, slow moving inventories,

all known liabilities and depreciation on property, plant

and equipment.

(ii) Borrowing Costs

Borrowing costs directly attributable to acquisition,

construction or production of assets that necessarily

takes a substantial period of time to get ready for its

intended use or sale are capitalised as part of the cost

of the respective assets. All other borrowing costs are

expensed in the period they occur. Borrowing costs

consist of interest and other costs that Group incurs in

connection with the borrowing of funds.

(iii) Net Finance Income / (Expenses)

Finance income comprises interest income on funds

invested. Interest income is recognized as it accrues in

profit or loss, using the effective interest method.

Finance costs comprise interest expense on borrowings

that are not directly attributable to the acquisition,

construction or productions of a qualifying asset

recognised using the effective interest method.

(c) Taxation

(i) Current Taxes

Current Income tax liabilities for the current and prior

periods are measured at the amount expected to be

recovered from or paid to the Commissioner General

of Inland Revenue. The tax rates and tax laws used to

compute the amount are those that are enacted or

substantively enacted by the reporting date.

The provision for income tax is based on the elements

of income and expenditures reported in the Financial

Statements and computed in accordance with the

provisions of the Inland Revenue Act.


80

Sierra Cables PLC

(ii) Deferred Taxation

Deferred taxation is provided, using the liability method,

on all temporary differences at the reporting date

between the tax bases of assets and liabilities and their

carrying amounts for financial reporting purposes.

Deferred tax assets are recognised for all deductible

temporary differences, carry forward of unused tax losses

and unused tax credits to the extent that it is probable

that future taxable profits will be available against which

the deductible temporary differences and carry forward

of unused tax losses / credits can be utilised.

The carrying amount of deferred tax assets is reviewed

at each reporting date and reduced to the extent that it

is no longer probable that the related tax benefit will be

realised.

Deferred tax assets and liabilities are measured at the

tax rates that are expected to apply to the year when

the asset is realized or the liability is settled, based

on tax rates (and tax laws) that have been enacted or

substantively enacted as at the reporting date.

Deferred tax assets and deferred tax liabilities are offset

if legally enforceable right exists to set off current

tax assets against current tax liabilities and when the

deferred taxes relate to the same taxable entity and the

same taxation authority.

(d) Related Party Transactions

Disclosure has been made in respect of the transactions

in which one party has the ability to control or exercise

significant influence over the financial and operating

policies/decisions of the other, irrespective of whether a

price is being charged or not.

The relevant details are disclosed in the respective notes

to the Financial Statements.

(e) Cash Flow Statement

Interest received and dividends received are classified

as investing cash flows, while dividend paid and interest

paid, is classified as financing cash flows for the purpose

of presentation of Statement of Cash Flows which has

been prepared using the ‘Indirect Method’.

(f) Earnings Per Share

Basic Earning Per Share is calculated by dividing the

profit or loss attributable to ordinary shareholders of the

Company by the number of shares outstanding at the

reporting date.

(g) Events Occurring After the Reporting Period

Events after the reporting period are those events

favorable and unfavorable, that occur between the end

of the reporting period and the date when the financial

statements are authorized for issue.

The materiality of the events occurring after the

reporting period is considered and appropriate

adjustments to or disclosures are made in the Financial

Statements, where necessary.

(h) Assets Held for Sale

Non-current assets that are expected to be recovered

primarily through sale rather than through continuing

use are classified as held for sale. Immediately before

classification as held for sale the assets are re measured

in accordance with the Group’s accounting policies.

Thereafter the assets are measured at the lower of

their carrying amount and fair value less costs to sell.



81

Sierra Cables PLC

Impairment losses on initial classification and subsequent

gains and losses on re-measurement are recognized in

profit or loss. Gains are not recognized in excess of any

cumulative impairment loss.

Once classified as held for sale, property plant and

equipment are no longer amortized or depreciated

4. NEW ACCOUNTING STANDARDS ISSUED BUT NOT EFFECTIVE AS AT REPORTING DATE

The Institute of Chartered Accountants of Sri Lanka has

issued the following new Sri Lanka Accounting Standards

which will become applicable for financial periods

beginning on or after 1st April 2017 or at a later date.

Accordingly, these Standards have not been applied in

preparing these financial statements.

SLFRS 9 – “Financial Instruments”

SLFRS 9, issued in 2014, replaces the existing guidance

in LKAS 39 Financial Instruments: Recognition and

Measurement. SLFRS 9 includes revised guidance on the

classification and measurement of financial instruments,

including a new expected credit loss model for calculating

impairment on financial assets. SLFRS 9 is effective for

annual period beginning on or after 1st January 2018

with early adoption permitted.

The Group is assessing the potential impact on its

consolidated financial statements resulting from the

application of SLFRS 9.

SLFRS 15 – “Revenue from Contracts with Customers”

SLFRS 15 establishes a comprehensive framework for

determining whether, how much and when revenue

is recognised. It replaces existing revenue recognition

guidance, including LKAS 18 Revenue, LKAS 11

Construction Contracts. SLFRS 15 is effective for annual

reporting periods beginning on or after 1st January 2018,

with early adoption permitted.

The Group is assessing the potential impact on its

consolidated financial statements resulting from the

application of SLFRS 15.

SLFRS 16 – “Leases”

SLFRS 16 requires lessees to recognise all leases on their

Statement of Financial Position as lease liabilities with

the corresponding right of use assets. The profit or loss

recognition pattern for recognised leases will be similar

to existing finance lease accounting, with interest and

depreciation expense recognized separately in Profit or

Loss. SLFRS 16 is effective for annual reporting periods

beginning on or after 1st January 2019.

The Group is currently evaluating the impact of SLFRS

16 adoption in 2019 except for short term and low value

leases.


82

Sierra Cables PLC

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

5. RevenueLocal Sales 3,607,479,136 2,952,483,649 3,385,067,275 2,790,532,513

Export Sales 436,970,337 83,527,209 339,914,499 74,957,500

4,044,449,473 3,036,010,858 3,724,981,774 2,865,490,013

6. Other IncomeGain on Disposal of Property, Plant and Equipment - 46,690,847 - 46,690,847

Dividend Income 134,998 523,090 134,998 523,090

Scrap Sales Income 26,768,102 4,008,947 26,767,527 3,777,596

26,903,100 51,222,884 26,902,525 50,991,533

7. Profit from OperationsProfit from Operations is stated after charging all the expenses including following;

Directors' Fees and Emoluments 21,607,250 17,513,750 21,607,250 16,713,750

Auditors' Remuneration - Audit 1,302,292 1,046,300 1,000,000 900,000

- Audit Related Services 300,000 279,970 300,000 279,970

Depreciation and Amortization 87,334,061 84,936,318 70,781,100 68,646,505

Written off of Inventories 44,296,346 - 44,296,346 -

Provision for Obsolete Inventories 2,119,931 9,669,251 - 9,669,251

Provision for Impairment of Investment in Subsidiary - - 55,000,000 62,000,000

Provision for Impairment of Other Receivables - 4,500,000 - 4,500,000

Provision for Impairment of Trade Receivables 34,228,581 24,350,525 29,438,139 9,532,904

Personnel Costs

Salaries, Wages and Related Costs 158,964,415 136,348,081 147,720,745 130,502,864

Defined Contribution Plan Cost 19,353,861 17,459,396 18,596,451 16,701,986

Defined Benefit Plan Cost (Note 24) 5,790,171 5,356,867 5,763,455 5,588,217

8. Net Finance Costs8.1 Finance Income

Interest Income 966,938 2,768,536 946,485 2,768,536

Net Exchange Gain 686,622 - 788,826 -

1,653,560 2,768,536 1,735,311 2,768,536



83

Sierra Cables PLC

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

8.2 Finance Costs

Interest on - Overdraft 12,087,518 6,790,597 3,852,328 2,208,297

- Lease - 146,957 - 146,957

- Import Demand Loans 112,178,830 55,539,713 101,994,920 51,449,934

- Bank Loans 29,095,025 22,420,515 19,128,810 14,438,296

- Pro Note Interest 359,523 - 359,523 -

Net Exchange Loss - 22,400,017 - 21,082,058

153,720,896 107,297,799 125,335,581 89,325,542

Net Finance Costs 152,067,334 104,529,263 123,600,270 86,557,006

9. Income Tax ExpenseIncome Tax on Profit for the Year (Note 9.1) 84,650,518 27,804,338 84,650,518 27,804,338

Under provision in respect of previous year 9,862,233 - 9,862,233 -

Deferred Tax (Reversal)/Charge for the Year (Note 25.2) (10,322,805) 50,697,338 (8,756,976) 51,559,691

84,189,946 78,501,676 85,755,775 79,364,029

9.1 Reconciliation Between Accounting

Profit and Tax Expense

Profit Before Tax 346,794,767 273,134,238 321,481,105 255,285,591

Aggregate Disallowed Income (1,081,483) (3,291,626) (1,081,483) (3,291,626)

Aggregate Disallowable Expenses 157,743,952 139,879,409 134,065,804 162,453,390

Aggregate Allowable expenses (146,380,583) (212,815,209) (128,016,331) (186,857,538)

Taxable Profit 357,076,653 196,906,813 326,449,095 227,589,817

Income from Other Sources 653,059 23,337 653,059 23,337

Total Statutory Income 357,729,712 196,930,149 327,102,154 227,613,154

Tax Loss Claimed (Note 9.2) (7,756,392) (79,664,604) (7,756,392) (79,664,604)

Qualifying Payments - (33,967,504) - (33,967,504)

Taxable Income 349,973,320 83,298,041 319,345,762 113,981,046

Tax on Exports @ 12% 3,574,722 794,638 3,574,722 794,638

Tax on Balance Income @ 28% 81,075,796 27,009,700 81,075,796 27,009,700

84,650,518 27,804,338 84,650,518 27,804,338

9.2 Accumulated Tax Losses

Balance as at 1st April 10,895,851 228,698,903 10,895,851 228,698,903

Adjustments during the Year (3,139,459) (138,138,448) (3,139,459) (138,138,448)

Tax Loss for the Year 2,997,849 - - -

Tax Loss Claimed during the Year (7,756,392) (79,664,604) (7,756,392) (79,664,604)

Balance as at 31st March 2,997,849 10,895,851 - 10,895,851


84

Sierra Cables PLC

Sierra Cables PLC

In terms of Section 52 of Inland Revenue Act No. 10 of 2006, the profit from exports of Sierra Cables PLC is taxable at the

rate of 12% and other profits and income are taxable at the rate of 28%.

Sierra Industries (Private) Limited

As per the section 16 (c) (1) and (2) of the Inland Revenue (Amendment) Act No. 22 of 2011 as amended by Act No. 08 of

2012, the Sierra Industries (Private) Limited’s profits and income (Other than any profits and income from the Sale of any

Capital Asset) shall be exempted from income tax for a period of six years.

10. Basic Earning Per Share

Basic Earnings Per Share is calculated based on the Profit after taxation attributable to the Ordinary Shareholders divided

by the Weighted Average Number of Odinary Shares outstanding during the year.

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

Profits attributable to ordinary shareholders (Rs.) 267,515,510 199,934,090 235,725,330 175,921,562

Weighted average number of ordinary shares 537,512,430 537,512,430 537,512,430 537,512,430

Basic Earnings per share (Rs.) 0.50 0.37 0.44 0.33

11. Dividend per ShareDividend Declared and Paid During the Year (Rs.) 134,378,108 107,502,486 134,378,108 107,502,486

Average Number of Ordinary Shares 537,512,430 537,512,430 537,512,430 537,512,430

Dividend per Share (Rs.) 0.25 0.20 0.25 0.20

As at 31st March

12. Discontinued OperationsAssets Classified as Held for Sale

Sierra Power (Private) Limited (Note 12.1) 148,624,096 147,854,862 - -

Plant & Machinery (Note 12.2) 18,000,000 18,000,000 18,000,000 18,000,000

166,624,096 165,854,862 18,000,000 18,000,000

Liabilities Directly Associated with Assets Classified as Held for Sale

Sierra Power (Private) Limited 6,596,000 6,589,430 - -

6,596,000 6,589,430 - -

12.1 Sierra Power (Private) Limited

The Board of Directors have resolved to dispose the investment in Sierra Power (Private) Limited at the meeting held on

27th January 2015. The Company has initiated the process of disposing this investment by signing a Memorandum of

Understanding of the disposal of entire investment of the subsidiary for Rs. 180 Mn with a third party as at 27th January

2016. An advance payment of Rs. 10 Mn has been received on 09th August 2016. Accordingly, this investment has been

classified as an Held for Sale Investment as at the reporting date.



85

Sierra Cables PLC


Rs.2016

Rs.

12.1.1 Loss after tax From Discontinued Operations

Revenue - -

Cost of Sales - -

Gross Profit/Loss - -

Other Income - -

Administrative Expenses (1,965,557) (1,822,544)

Loss from Operations (1,965,557) (1,822,544)

Loss before tax from discontinued operations (1,965,557) (1,822,544)

Loss for the year from Discontinued Operations (1,965,557) (1,822,544)

Deficit per Share (0.23) (0.21)

As at 31st March

12.1.2 Assets and Liabilities Classified as Held for Sale

Assets

Property, Plant & Equipment 124,267,453 123,269,433

Debtors & Other Receivables 24,356,317 24,584,790

Cash in Hand & Bank 326 639

Assets classified as held for sale 148,624,096 147,854,862

Liabilities

Amount Due To Related Companies 62,574,480 59,846,259

Long Term Loans 6,000,000 6,000,000

Trade & Other Payables 596,000 589,430

Liabilities Directly Associated with Assets Classified as Held for Sale 69,170,480 66,435,689

Net Assets Directly Associated with Disposal 79,453,616 81,419,173

For the year ended 31st March

12.1.3 Cash flow from/(Used in) Discontinued Operation

Net Cash Flows Generated from Operating Activities 1,009,177 715,511

Net Cash Flows Used in Investing Activities (1,009,490) (1,185,101)

Net Decrease in Cash and Cash Equivalents (313) (469,590)

12.2 Plant & Machinery

The Company has classified part of its Plant and Machinery as Non Current Asset Held for Sale during the previous

year, following the decision by Board of The Directors to dispose the same. Effort to sell the Plant and Machinery was

commenced during the previous financial year and Directors are of the opinion that they still commit to the initial decision

to sell the assets and actively involved in the same as at the end of the reporting period. Further Directors are of the

opinion that, there is no further impairment on the carrying amount of the asset as at 31st March 2017.


86

Sierra Cables PLC

13. P

rope

rty,

Pla

nt a

nd E

quip

men

t

As

at 3

1st

Mar

ch

Land

Rs.

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Rs.

Pla

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ry Rs.

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Rs.

Cap

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Pro

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Rs.

Tot

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2017 R

s.

Tot

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2016 R

s.

Gro

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Cos

t /

Rev

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tion

Bal

ance

as

at 1

st A

pril

202

,874

,851

3

64,9

69,0

42

708

,966

,452

3

3,56

0,26

1 5

,333

,073

5

8,25

6,05

8 2

6,80

5,85

2 1

4,25

4,03

9 1

,415

,019

,629

1

,516

,803

,035

Add

itio

ns -

-

-

9,

462

123,

132

933

,060

1

,393

,312

94

,738

,999

97,1

97,9

65 5

9,39

7,31

2

Tran

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7

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-

-

-

-

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(7

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,577

)-

-

Dis

posa

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-

(2

,111

,381

) -

-

(2

6,45

0) -

-

(2

,137

,831

) (3

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4)

Exch

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Diff

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ce

-

-

-

29,

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9,2

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-

-

2,1

77,1

95

2,2

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Bal

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as

at 3

1st

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202

,874

,851

3

72,2

23,6

19

706

,855

,071

3

3,59

9,33

6 5

,465

,451

5

9,16

2,66

8 2

8,19

9,16

4 10

3,91

5,65

6 1

,512

,295

,816

1

,415

,019

,628

Dep

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n

Bal

ance

as

at 1

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pril

-

59,

999,

863

174

,791

,611

1

6,38

4,58

6 4

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3

9,93

8,83

7 1

9,36

3,36

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3

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83

265

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-

18,

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51,

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8

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,662

2

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-

8

5,21

6,84

6 8

3,89

0,70

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Dis

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-

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-

78,

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314

224

,504

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2

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4 4

,594

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4

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9 2

1,78

3,50

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3

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202

,874

,851

3

04,9

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79

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,174

,841

1

7,17

5,67

5 1

,183

,251

1

8,31

7,22

2 7

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,488

1

4,25

4,03

9 -

1

,100

,391

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Bal

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as

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202

,874

,851

2

93,9

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05

482

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1

2,98

2,87

2 8

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68

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-



87

Sierra Cables PLC

As

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1st

Mar

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Land

Rs.

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3

16,2

69,4

17

548

,150

,495

2

6,62

6,44

7 4

,614

,756

5

5,30

2,10

8 2

3,89

1,57

9 1

5,24

8,93

1 1

,126

,053

,083

1

,107

,483

,938

Add

itio

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-

2

5,73

1 1

58,0

60

1,3

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12

17,2

33,6

3518

,740

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(2

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(2

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-

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) (3

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Bal

ance

as

at 3

1st

Mar

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135

,949

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3

23,5

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94

546

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2

6,62

6,44

7 4

,640

,487

5

5,43

3,71

8 2

5,21

4,99

1 2

5,22

7,98

9 1

,142

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1

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Bal

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as

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-

5

4,48

3,34

9 1

39,2

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48

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3,6

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54

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234,

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996,

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-

257

,289

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2

24,1

20,3

46

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15,

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39,

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3,8

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6

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,842

2

,231

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-

6

8,63

2,18

4 6

7,60

0,89

4

Dis

posa

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-

(1

,583

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(2

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-

(1

,609

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1,95

1)

Bal

ance

as

at 3

1st

Mar

ch

-

70,

296,

820

177

,610

,980

1

4,52

1,62

4 4

,007

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3

8,64

6,77

1 1

9,22

8,14

5 -

3

24,3

11,4

87

257

,289

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Net

Boo

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as

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1st

Mar

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2016

135

,949

,350

2

61,7

86,0

68

408

,860

,447

1

5,98

6,49

1 9

69,7

02

23,

067,

729

6,8

95,0

76

15,

248,

931

- 8

68,7

63,7

94

Bal

ance

as

at 3

1st

Mar

ch

2017

135

,949

,350

2

53,2

27,1

74

368

,428

,154

1

2,10

4,82

4 6

33,3

40

16,

786,

947

5,9

86,8

46

25,

227,

989

818

,344

,603

-


88

Sierra Cables PLC

13.1 Fully-Depreciated Assets

The initial cost of fully-depreciated Property, Plant and Equipment which are still in use as at Reporting Date are as follows:

Group Company

As at 31st March2017

Rs.2016

Rs.2017

Rs.2016

Rs.

Motor Vehicles 7,142,591 7,026,200 7,142,591 7,026,200

Furniture and Fittings 3,161,196 2,123,013 3,161,196 2,123,013

Factory Equipment 27,015,887 20,609,025 27,015,887 20,609,025

Office & Computer Equipment 15,202,305 7,564,055 15,202,305 7,564,055

52,521,979 37,322,293 52,521,979 37,322,293

13.2 Details of Property, Plant and Equipment of the Group Stated at Valuation are Indicated below:

Property

Location

Method of

Valuation

Effective date of

valuation

Valuer Land Extent

(Acres)

Carrying Value

of Revalued

Assets as at 31st

March 2017

if carried at

Historical Cost

Rs.

Carrying Value

of Revalued

Assets as at 31st

March 2017

Rs.

Land, buildings,

Plant and

machinery at

Sierra Cables

PLC Galwarusa

Road, Korathota

(within the limits

of Kaduwela

Pradeshiya Sabha)

Market Approach 31st March 2013 Mr. K. Arthur Perera

A.M.I.V.(Sri Lanka)

Valuer & Consultant

5.6375 287,695,046 596,067,895

287,695,046 596,067,895

Land at Sierra

Industries (Pvt)

Ltd Galwarusa

Road, Korathota

(within the limits

of Kaduwela

Pradeshiya Sabha)

Market Approach 31st March 2015 Mr. K. Arthur Perera

A.M.I.V.(Sri Lanka)

Valuer & Consultant

2.7886 46,317,298 66,925,500

46,317,298 66,925,500



89

Sierra Cables PLC

13.3 The carrying amount of revalued assets that would have been included in the Financial Statements, had the assets

been carried at Cost less Accumulated Depreciation is as follows;


Rs.2016

Rs.

At Cost 334,012,344 373,442,000

At Valuation 662,993,395 717,807,238

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

14. Intangible Assets Cost


Additions During the Year 7,738,544 637,090 7,738,544 637,090

Balance as at 31st March 19,465,025 11,726,482 19,465,025 11,726,482

Amortization Charge


Charge for the year 2,148,915 977,166 2,148,915 977,166


Carrying Value as at 31st March 6,859,049 1,269,421 6,859,049 1,269,421

Intangible Assets represents the cost of Computer Software acquired by the Company. The initial cost of fully-amotised

intangible assets which are still in use as at 31st March 2017 was Rs. 10,018,868/-

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

15. Investment PropertyBalance as at 1st April - 16,427,000 - 16,427,000

Disposals - (16,427,000) - (16,427,000)

Balance as at 31st March - - - -

Depreciation

Balance as at 1st April - 2,464,051 - 2,464,051

Charge for the Year - 68,446 - 68,446

Disposals - (2,532,497) - (2,532,497)

Balance as at 31st March - - - -

The Investment Property which was consisted of an apartment in Fairfield Residencies a Condominium Property situated

in Colombo 08, having a floor area of 1,720 sq.ft. has been sold for Rs 22,000,000 during the year ended 31st March 2016.


90

Sierra Cables PLC

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

16. Investments in SubsidiariesSierra Power (Private) Limited (Note 12) - - 86,680,010 86,680,010

Sierra Industries(Private) Limited - - 145,600,010 145,600,010

Sierra Cables East Africa Limited - 28,780,000 28,780,000

261,060,020 261,060,020

Provision for Impairment of Subsidiaries (Note 16.1) - - (134,000,000) (79,000,000)

- - 127,060,020 182,060,020

16.1 Provision for Impairment of Subsidiaries

The Company has made a provision for impairment of Rs. 134,000,000 /- on the investment in subsidiaries as at 31st March

2017 due to adverse business environment in which the subsidiary companies are operated. This has resulted in continuous

operating losses and negative operating cash flows in subsidiary companies and discounted future cash flows has been

considered as the recoverable amount for the calculation of provision for impairment as at the each reporting date. The

breakup of the impairment provision is as follows;

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

Provision for Impairment of Subsidiaries

Balance as at 1st April - - 79,000,000 17,000,000

Provision Made During the Year - - 55,000,000 62,000,000

Balance as at 31st March - - 134,000,000 79,000,000

As at

Sierra Industries

(Private) Limited

31.03.2017

Sierra Cables East Africa

Limited31.12.2016

16.2 Summarized Financial Information of Subsidiaries

Number of shares 22,100,002 2,000

Holding 82.35% 100%

Cost of the Investment 145,600,010 28,780,000



91

Sierra Cables PLC

Sierra Industries (Private) Limited Sierra Cables East Africa Limited

As at 31.03.2017Rs.

31.03.2016Rs.

31.12.2016Rs.

31.03.2016Rs.

16.3 Non-Controlling Interest (NCI) in Subsidiary

NCI Percentage (%) 17.65% 17.65% 0% 0%

Total Assets 587,749,310 455,296,381 98,995,672 26,457,039

Total Liabilities 599,544,083 433,417,618 72,004,603 3,145,226

Net Assets / (Liabilities) (11,794,773) 21,878,763 26,991,069 23,311,813

Carrying Amount of NCI (1,985,464) 3,861,602 - -

Loss for the year (34,535,890) (38,683,166) (2,098,495) (5,468,187)

Other Comprehensive Income - - 309,564 -

Total Other Comprehensive Expense (34,535,890) (38,683,166) (1,788,931) (5,468,187)

Loss allocated to NCI (6,095,585) (6,827,579) - -

Cash Flows from Operating Activities (81,055,552) 11,846,584 22,015,266 (11,413,884)

Cash Flows from Investing Activities (876,994) (52,041) (81,796,364) 18,313,707

Cash Flows from Financing Activities 57,811,804 (12,771,119) 65,050,422 -

Net Increase / (Decrease) in Cash and Cash Equivalents (24,120,742) (976,576) 5,269,324 6,899,823

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

17. Investments in Equity Accounted InvesteesTea Leaf Resort Holdings (Private) Limited (Note 17.2) - - 2,500,000 2,500,000

T & G Lanka (Private) Limited (Note 17.3) 3,621,186 2,746,962 3,300,000 3,300,000

3,621,186 2,746,962 5,800,000 5,800,000

Provision for Impairment of Equity Accounted Investee (Note 17.1) - - (2,500,000) -

3,621,186 2,746,962 3,300,000 5,800,000

17.1 Provision for Impairment of Equity

Accounted Investees

Tea Leaf Resort Holdings (Private) Limited - - (2,500,000) -

- - (2,500,000) -


92

Sierra Cables PLC

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

17.2 Tea Leaf Resort Holdings (Private)

Limited

Cost of the Investment 2,500,000 2,500,000 2,500,000 2,500,000

Share of Loss for the Year (Net of Tax) - - - -

Accumulated Share of Loss Brought Forward (2,500,000) (2,500,000) - -

Net Asset Value of Associate as at 31 March - - 2,500,000 2,500,000

17.3 T & G Lanka (Private)Limited

Cost of the Investment 3,300,000 3,300,000 3,300,000 3,300,000

Share of Profit for the Year (Net of Tax) 874,224 293,942 - -

Accumulated Share of Loss (553,038) (846,980) - -

Net Asset Value of Associate as at 31 March 3,621,186 2,746,962 3,300,000 3,300,000

T & G Lanka (Private) Limited Tea Leaf Resort Holdings (Private) Limited


Rs.2016

Rs.2017

Rs.2016

Rs.

17.4 Summarized Financial Information of

Associates

Revenue 64,946,509 37,960,270 - -

Profit/(Loss) after Tax 3,122,227 1,049,790 (4,068,415) (119,470)

Total Assets 38,550,591 20,499,195 2,470,804 6,657,719

Total Liabilities 26,390,081 9,421,729 7,125,540 7,114,040

Company

2017 2016

As at 31st MarchNo of Ordinary

Shares/UnitsFair Value

Rs.No of Ordinary

Shares/UnitsFair Value

Rs.

18. Available for Sale InvestmentsNational Development Bank PLC 21,022 2,837,970 20,250 3,404,025

Richard Pieris Exports PLC 10,359 2,123,595 10,359 2,278,980

ACL Cables PLC 1,520 82,080 760 76,000

DFCC Bank PLC 10,000 1,140,000 10,000 1,385,000

Chevron Lubricants PLC 3,678 628,938 1,839 555,562

Kelani Cables PLC 200 23,400 200 22,500

NDB Aviva Growth Fund Investment in Units 2,199,836 22,306,332 219,984 20,999,628

Capital Alliance High Yield FundInvestment in Units - - 1,050,280 16,033,996

- 29,142,315 - 44,755,691



93

Sierra Cables PLC

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

19. InventoriesRaw Materials 468,981,718 120,700,207 424,493,008 98,936,178

Work in Progress 294,452,793 132,600,328 294,452,793 132,600,328

Finished Goods 473,048,041 455,455,028 441,842,809 430,668,490

Packing Materials 9,707,422 13,300,592 9,707,422 13,300,592

Stationeries - 1,802,747 - 1,802,747

Engineering Items 22,209,520 24,562,288 22,209,520 19,663,932

Goods in Transit 18,612,623 18,612,623 18,612,623 18,612,623

1,287,012,117 767,033,812 1,211,318,175 715,584,890

Less: Provision for Obsolete Inventories (Note 19.1) (53,092,773) (61,958,792) (50,972,842) (61,958,792)

1,233,919,344 705,075,020 1,160,345,333 653,626,097

19.1 Provision for Obsolete Inventories


Provision Made during the Year 2,119,931 9,669,251 - 9,669,251

Written off during the Year (10,985,950) - (10,985,950) -


20. Trade and Other ReceivablesTrade Receivables 1,524,292,128 1,090,617,177 1,329,003,994 969,566,099

Less: Provision for Impairment (Note 20.1) (135,590,708) (168,115,337) (111,418,566) (148,733,637)

1,388,701,420 922,501,840 1,217,585,428 820,832,462

VAT Receivable 201,588,935 88,243,685 105,814,394 34,893,842

Deposits, Prepayments and Advances 94,678,496 76,826,120 84,032,916 66,662,624

Other Receivables 32,950,953 17,125,095 - -

1,717,919,804 1,104,696,740 1,407,432,738 922,388,928

Less: Provision for Impairment (Note 20.2) (44,893,550) (59,244,162) (44,893,550) (59,244,162)

1,673,026,254 1,045,452,578 1,362,539,188 863,144,766

20.1 Provision for Impairment of Trade

Receivables


Provision made during the year 34,228,581 24,350,525 29,438,139 9,532,904

Written off during the Year (66,753,210) - (66,753,210) -



94

Sierra Cables PLC

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

20.2 Provision for Impairment of Other

Receivables


Impairment for the Year - 4,500,000 - 4,500,000

Written off during the Year (14,350,612) (71,090,895) (14,350,612) (71,090,895)


21. Amounts Due from Related CompaniesNon trading

Sierra Civil Engineering & Construction (Private) Limited - 385,000 - 385,000

Sierra Power ((Private) Limited - - 62,574,480 59,846,259

Sierra Industries (Private) Limited - - 213,895,061 134,638,698

Tea Leaf Holding (Private) Limited - - - -

Sierra Cables East Africa Limited - - 45,534,678 2,854,664

Exchange Difference 8,510 - -

8,510 385,000 322,004,219 197,724,621

Trading

Sierra Electrical Engineering (Private) Limited 616,785 616,785 616,785 616,785

Sierra Technology Holdings (Private) Limited 9,255,105 4,052,915 9,255,105 4,052,915

Sierra Readymix (Private) Limited 236,161 57,437 236,161 57,437

Sierra Water Works (Private) Limited 2,936 2,936 2,936 2,936

Sierra Construction Limited 99,902,329 100,626,267 99,902,329 100,626,267

Sierra Development (Private) Limited - 55,868 - 55,868

Sierra Construction & General Sales Join Venture (5,583) 859 (5,583) 859

Sierra Piling (Private) Limited - 89,672 - 89,672

110,007,732 105,502,739 110,007,732 105,502,739

Total 110,016,242 105,887,739 432,011,951 303,227,360

22. Cash and Cash EquivalentsFavourable Balances

Cash in Hand and at Bank 78,771,458 80,234,093 73,481,406 73,005,443

78,771,458 80,234,093 73,481,406 73,005,443

Unfaovurable Balances

Bank Overdraft (98,056,157) (72,104,387) (37,681,897) (35,542,771)

Cash and Cash Equivalents for Cash Flow Purposes (19,284,699) 8,129,706 35,799,509 37,462,672



95

Sierra Cables PLC

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

23. Stated Capital537,512,430 Ordinary Shares 894,565,898 894,565,898 894,565,898 894,565,898

894,565,898 894,565,898 894,565,898 894,565,898

24. Retirement Benefit ObligationsBalance as at 1st April 26,208,882 26,793,172 25,929,429 26,282,368

Current Service Cost 2,911,218 2,868,404 2,911,218 3,099,755

Interest Cost 2,878,953 2,488,462 2,852,237 2,488,462

Actuarial (Gain) / Loss (2,070,089) (1,545,718) (2,070,089) (1,545,718)

Benefits Paid by the Plan (2,093,801) (4,395,438) (2,093,801) (4,395,438)


24.1 The total amount charged to Statement of Profit or Loss and Other Comprehensive Income in respect of Retirement

Benefit Obligations made up as follows;

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

Current Service Cost 2,911,218 2,868,404 2,911,218 3,099,755

Interest Cost 2,878,953 2,488,462 2,852,237 2,488,462

Recognise in Profit or Loss 5,790,171 5,356,867 5,763,455 5,588,217

Actuarial Gain (2,070,089) (1,545,718) (2,070,089) (1,545,718)

Recognised in Other Comprehensive Income (2,070,089) (1,545,718) (2,070,089) (1,545,718)

24.2 LKAS 19 requires the use of acturial techniques to make a reliable estimate of the amount of retirement benefits that

employees have earned in return for their service in the current and prior periods and discount that benefit using projected

unit credit method in order to determine the present value of the retirement benefit obligation and the current service

cost. This requires an entity to determine how much benefit is attributable to the current and prior periods and to make

estimates about demographic variables and financial variables that will influence the cost of the benefit.

An Actuarial Valuation of the Employee Benefit Obligations of the Company was carried out as at 31st March 2017, by

Messers M. Poopalanathan, a firm of Professional Actuaries. The valuation was carried out as per the “Projected Unit

Credit” (PUC) method.

The following key assumptions were made in arriving at the above figure.

2017 2016

Expected Annual Average Salary Increment 10% 10%

Discount Rate 12% 11%

Retirement Age 55 Years 55 Years

Mortality A 67/70 Mortality Table issued by the Institute of Actuaries, London

Staff Turnover Rate 1.82% for age up to 50 and thereafter zero.


96

Sierra Cables PLC

24.3 Sensitivity of Assumptions Employed in Acturial Valuation

The calculation of the Employee Benefit Obligation is sensitive to the assumptions set out above. The following table

summarizes how the impact on the defined benefit obligation at the end of the reporting period would have increased

(decreased) as a result of a change in the respective assumptions by one percent.

Group Company

Retirement benefit obligation Retirement benefit obligation

One percentage point increase

Rs.


Rs.


Rs.


Rs.

Effect on the dicounting rate (2,060,202) 2,397,623 (2,021,264) 2,352,458

Effect on the salary escalation rate 2,295,339 (2,006,110) 2,249,735 (1,966,179)

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

25. Deferred Tax LiabilityBalance as at 1st April 186,911,342 135,787,695 160,774,382 108,788,382

(Reversal)/Provision for the Year (Note 25.2) (10,872,206) 51,123,647 (9,306,378) 51,986,000

Exchange Difference (25,044) - - -


2017 2016

As at 31st March

Temporary Difference

Rs.

Tax Effect

Rs.

Temporary Difference

Rs.

Tax Effect

Rs.

25.1 The Deferred Tax Liability is

attributable to the followings

Company

On Property, Plant and Equipment 598,244,910 158,774,199 619,929,501 170,976,557

On Retirement Benefit Obligation (27,528,994) (7,306,195) (25,929,429) (7,151,336)

On Accumulated Tax Losses - - (10,895,851) (3,050,838)

- 151,468,004 - 160,774,382

Group

On Property, Plant and Equipment 715,809,178 191,692,194 732,936,946 202,618,641

On Retirement Benefit Obligation (27,835,163) (7,391,922) (26,208,882) (7,229,583)

On Accumulated Tax Losses (2,997,849) (899,355) (10,895,851) (3,050,838)

On Other Provisions (26,292,073) (7,361,781) (19,381,700) (5,426,876)

Exchange Difference - (25,044) - -

- 176,014,092 - 186,911,342



97

Sierra Cables PLC

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

25.2 Deferred Tax Liability - (Reversal)/

Charge for the Year

Income Statement (10,322,805) 50,697,338 (8,756,976) 51,559,691

Profit or Loss and Other Comprehensive Income (549,401) 426,309 (549,402) 426,309

(10,872,206) 51,123,647 (9,306,378) 51,986,000

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

26. Long Term Loans Balance as at 1st April 241,080,475 281,464,358 175,423,020 179,807,721

Loans Obtained during the Year 35,902,422 57,000,000 - 57,000,000

Repayments during the Year (98,592,574) (91,383,883) (70,162,345) (61,384,701)

Classified as Assets Held for Sale - (6,000,000) - -


Current Portion of Long Term Loans 106,906,114 98,817,384 48,646,677 68,818,200

Non Current Portion of Long Term Loans 71,484,209 142,263,091 56,613,998 106,604,820

27. Lease liabilitiesBalance as at 1 April - 2,966,779 - 2,966,779

Rentals Paid - (2,966,779) - (2,966,779)

Gross Lease Liability - - - -

Total Liability at the end of the Year - - - -

28. Trade and Other PayablesTrade Creditors 853,614,582 286,761,674 832,670,287 248,790,651

Other Payables 120,656,274 106,961,692 30,296,400 38,582,298

Taxes Payable (1,686,205) 18,592,708 (1,686,205) 18,592,708

972,584,651 412,316,074 861,280,482 305,965,657

29. Amount Due to Related CompaniesSierra Industries (Private) Limited - - 85,817 19,838

- - 85,817 19,838

30. Import Demand LoanBalance as at 1st April 768,178,333 767,506,150 714,097,468 730,653,350

Loans Obtained during the Year 2,572,727,907 2,059,584,799 2,329,593,559 1,978,681,382

Repayments during the Year (2,134,708,429) (2,058,912,616) (1,977,816,114) (1,995,237,264)

Balance as at 31st March 1,206,197,811 768,178,333 1,065,874,913 714,097,468


98

Sierra Cables PLC

31. Contingent Liabilities

There were no Material contingent Liabilities as at the reporting date which require adjustments to or disclosure in the

Financial Statements.

32. Commitments

There were no material Capital Commitments as at the reporting date.

33. Events Occurring After the Reporting Period

There were no material Events Occurring after the Reporting Period that require adjustments to or disclosure in the

Financial Statements.

34. Assets Pledged as Security and Repayment Terms

The following assets have been pledged as securities against the long term and short term borrowings that have been

disclosed in Notes 26, 27 and 30 to the Financial Statement respectively.

Name of the Bank

Assets Pledged Facility Obtained Interest Rate / Commission Rate

Repayment Terms

Sierra Cables PLC

Commercial Bank of Ceylon PLC

(1) - Overdraft of Rs 40 Mn PLR+1.5% p.a -

(2) A Primary Mortgage Numbered 3627 Valued at 550 Mn secured upon Land and Buildings and Plant and Machinery at 39/1A Galawarusa Road,Korathota and Stocks and books of Debt valued at Rs. 490 Mn dated 13/1/2012

Letter of Credit Facility for Rs. 400 Mn Combined Facility for the grant of Import Demand Loan and Release of Document against Acceptance Rs. 1,000 Mn

AWPLR+1.75% p.aAWPLR+1.5% p.a

Repayable over 180 daysRepayable over 180 days

(3) A Primary Mortgage No.FCC/11/141 secured upon 160mm Bow Standing Machine and 8 Wire Drawing and anncaling Line.

Term Loan (3) of Rs. 114 Mn AWPLR+2% p.a 56 Monthly Installments

(4) A Primary Mortgage Numbered 3627 Valued at 550 Mn secured upon Land and Buildings and Plant and Machinery at 39/1A Galawarusa Road,Korathota and Stocks and books of Debt valued at 490 Mn dated 13/1/2012

Term Loan of Rs.100 Mn granted as a sub limit of the Import Demand / Release of Document against Acceptance facility of Rs. 1,000 Mn .

AWPLR+1.5% p.a 60 Monthly Installments

(5) General term and conditions relating to loan for Rs.57 Mn to be signed.

Term Loan for Rs. 57Mn or equivalent USD 400,000

AWLR+ 1.5% 48 Monthly Installments (6 months grace period)



99

Sierra Cables PLC

Name of the Bank


Repayment Terms

Bank of Ceylon

(1) Relative bills of Exchange, Shipping Documents and the underlying goods under the Bank’s Constructive control.

Letter of Credit for 200 Mn. .25% p.q Self liquidating

(2) Accepted Usance Drafts. Acceptance facility for 200 Mn. Sub limit of under Facility stated above.

.125% p.m Repayable over 60 days

(3) Hypothecation over stocks. Hypothecation Loan for 200 Mn AWPLR+1.5% p.a Repayable over 180 days

Cargills Bank Limited

(1) Mortgage over stock and Debtors for Rs. 100 Mn

Documentary Credit for Rs.100 Mn Sight- 0.25% Repayable over 90 days Usance- 0.375%


Acceptance Facility for Rs. 100 Mn Bank's prevaling schedule of charges.

Repayable over 180 days


Shipping Guarantee for Rs. 100 Mn. 0.25% together with levies


Clean Import Loan for Rs. 100 Mn AWPLR+1.75% Repayable over 180 days

People’s Bank

(1) i.) Indemnity of the Companyii.) 10% cash Margineiii.) Letter of Set-off

Letter of Guarantee Facility for Rs. 80 Mn

1% p.a pro rata basis Upon expiry or return of the original guarantee, whichever is earlier

(2) i.) Indemnity of the Companyii.) Documents of tital to goods shipped

Letter of Credit (Sight/Usance) for Rs.400 Mn

0.2% p.q Repayable over 90 days

(3) Mortgage over stocks and book debts for Rs. 500Mn Promissory note

Short term Loan (Import/Local) (Sub limit of under facility No 02)

AWPLR+2.5%2% rebate on Regular re payments


(4) Mortgage over machinary Term Loan for Rs. 200mn (Sub limit of under facility No 02)

AWPLR+2.5%2% rebate on Regular re payments

36 Monthly Installments

(5) Mortgage over stocks and book debts for Rs. 500MnPromissory note

Overdraft Facility for Rs. 20 Mn AWPLR+0.5% On Demand


100

Sierra Cables PLC

Name of the Bank


Repayment Terms

DFCC Bank

(1) - Overdraft Facility for Rs. 20 Mn AWPLR+2% On Demand

(2) A mortgage Bond for Rs. 120,000,000 over stock

Import line for Rs. 100 Mn Within which,

(i) Letter of Credit Facility for Rs. 100Mn(Sub limit of under facility No 02)

.25% p.q With Company’s fund/ Proceed of Import Demand Loan

(ii) Acceptance Facility for Rs. 100 Mn(Sub limit of under facility No 02)

.375% p.q With Company's fund/ Proceed of Import Demand Loan

(iii) Shipping Guarantee facility for Rs 100 MnEndoesement of Copy Document, Airway Bills

0.3% for First MonthRs. 2,000 p.m. thereafter0.3% for First MonthRs. 2,000 p.m. thereafter

-

Import Loans facility for Rs 100 Mn(Sub limit of under facility No 02)

Commission foe Documents - DP- 0.3% -DA-0.35%AWPLR(Spot) +1%Value < 10Mn - .05% p.a Value > 10Mn - 1.25% p.a(Subject to maximun Rs. 3,500

One- Off Facility

(1) Import line for Rs. 150 MnWithin which,

(i) Letter of Credit Facility for 150 Mn(Sub limit of under facility No 01)


(ii) Acceptance Facility for Rs. 150 Mn(Sub limit of under facility No 01)


(iii) Shipping Guarantee for Rs 150 MnEndoesement of Copy Document, Airway Bills (Sub limit of under facility No 01)

0.3% for First MonthRs. 2,000 p.m. thereafter 0.3% for First Month Rs. 2,000 p.m. thereafter

-



101

Sierra Cables PLC

Name of the Bank


Repayment Terms

(iv) Import Loan facility for 150 Mn(Sub limit of under facility No 01)

Commission foe Documents - DP- 0.3% -DA-0.35%AWPLR(Spot) +1.25%


(v) Foreign Exchange Contract facility for USD 100,000(Sub limit of under facility No 01)

To be fixed at the time of contract

-


Sampath Bank PLC

(1) Loan Agreement for Rs. 20 Mn Primary Mortgage Bond for Rs. 20 Mn over machinery

Medium Term Loan for 20 Mn AWPLR+2.5% p.a 48 Monthly Installments

(2) Loan Agreement for Rs. 20 Mn Primary Mortgage bond for Rs. 35 Mn over factory Land and Building at Korathota, Kaduwela in extent of 2A:3R:6.17PSecondary Mortgage bond for Rs. 17.6 Mn over factory Land and Building at Korathota, Kaduwela in extent of 2A:3R:6.17P


(3) Loan Agreement for Rs. 65 MnPrimary Mortgage Bond for Rs. 65 Mn over machinery


(4) Loan Agreement for Rs. 35 Mn Primary Mortgage bond for Rs. 35 Mn over factory Land and Building at Korathota, Kaduwela in extent of 2A:3R:6.17PSecondary Mortgage bond for Rs. 17.6 Mn over factory Land and Building at Korathota, Kaduwela in extent of 2A:3R:6.17P


(5) Overdraft Agreement for Rs. 60 MnHypothecation Bond over Stocks and Book Debts of the Company for Rs. 160 Mn

Overdraft of Rs. 40 Mn AWPLR+2.5% p.a On Demand

(6) Short term Import Loan Agreement for Rs. 100 MnHypothecation Bond over Stocks and Book Debts of the Company for Rs. 160 Mn

Short term Import Loan AWPLR+2.5% p.a Repayable over 180 days

(7) Accepted Bills of ExchangedHypothecation Bond over Stocks and Book Debts of the Company for Rs. 160 Mn

Acceptance facility for 100 Mn. Prevailing Rate of the Bank



102

Sierra Cables PLC

Name of the Bank


Repayment Terms

(8) Documentary Credit AgreementRelative Bills of Exchange and Shipping DocumentsHypothecation Bond over Stocks and Book Debts of the Company for Rs. 160 Mn

Documentary Credit facility for 100 Mn

Prevailing Rate of the Bank

Sight/ Usance up to 180 days

(9) Master Counter indemnity of the Company for Rs. 25 Mn

Bank Guarantee Facility for Rs. 25 Mn 1.25% p.a 1 Year, Renewable

Sierra Cables East Africa Limited

Commercial Bank of Ceylon PLC

(1) i). Corporate Guarantee for Rupee equivalent of USD 990,000.

One-Off letter of Credit facility for USD 990,000.

Sight/Usance 0.25% p.q


ii). Lien over documents of title to goods under import

iii). Individual drafts covering the documents relating to goods released on acceptance to be lodged with the bank.

(2) i). Corporate Guarantee for Rupee equivalent of USD 990,000.ii). General term and conditions relating to loan to be signed.

Term Loan Facility for USD 990,000 LIBOR+5% p.a 60 monthly installments One year grace period

35. Related Party Disclosure

35.1 Transactions with Related Parties

Name of the Company Nature of the Transactions Transaction Value Balance Outstanding as at

31st March

2017

Rs.

2016

Rs.

2017

Rs.

2016

Rs.

Transactions with Subsidiary

Companies

Sierra Power (Private) Limited Amount Paid for Administration

Expenses 2,728,221 3,095,884 62,574,480 59,846,259

Sierra Industries (Private) Limited Amount Paid for Administration

Expenses 2,414,612 2,959,854 173,895,061 94,638,698

Funds Received from Sierra Industries

Customers (275,500) (266,191)

Interest chargers on import loans - 1,024,411

Funds Transfers /settlements 28,000,000 27,048,000

Payments for Custom 33,224,691 -

Payments for Suppliers 15,892,560 -

Loan Balance - - 40,000,000 40,000,000

Purchase of Goods (85,817) - (85,817) (19,838)

Settlement of Invoices 19,838 - - -



103

Sierra Cables PLC

Name of the Company Nature of the Transactions Transaction Value Balance Outstanding as at

31st March

2017

Rs.

2016

Rs.

2017

Rs.

2016

Rs.

Sierra Cables East Africa Limited Fund transfers 47,741,800 20,305,265 45,534,678 2,854,664

Amount Paid for Pre operation

Expenses 3,412,949 2,854,664

Transfer to share capital (8,474,735) (20,305,265)

Transactions with Other Related

Companies

Sierra Construction Limited Sale of Goods 109,703,133 158,627,411 99,902,329 100,626,267

Settlement of Invoices (110,427,071) (140,924,031)

Sierra Civil Engineering and

Construction (Private) Limited

Loan Settlement

(385,000) (1,300,000) - 385,000

Sierra Electrical Engineering (Private)

Limited

Sale of Goods

- - 616,785 616,785

Sierra Technology Holdings

(Private) Limited

Sale of Goods

9,704,299 4,877,056 9,255,105 4,052,915

(Previously Known as Sierra

Information Technologies (Private)

Limited)

Settlement of Invoices

(4,502,109) (3,186,166)

Sierra Water Works (Private) Limited - - 2,936 2,936

Sierra Redimix (Private) Limited Sale of Goods 236,161 43,418 236,161 57,437

Settlement of Invoice (57,437) (31,343)

Sierra Development (Private) Limited Sale of Goods 1,085,188 55,868 - 55,868

Settlement of Invoice (1,141,056) (217,654)

Sierra Construction & General Sales

Join Venture

Sale of Goods

- - (5,583) 859

Settlement of Invoice (6,442) -

Tea Leaf Holding (Private) Limited Loan granted - - - -

Provision made - (2,500,000)

Sierra Piling (Private) Limited Sale of Goods - 89,672 - 89,672

Settlement of Invoice (89,672) -


104

Sierra Cables PLC

35.2 Transactions with Key Management Personnel

Key Management personnel are those having authority and responsibility for planning ,directing and controlling the

activities of the Group . Accordingly the Directors of the Company (including Executive and Non Executive Directors )have

been classified as Key Management Personnel of the Company, Group.

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

Directors' Fees 7,560,000 6,600,000 7,560,000 5,500,000

Short Term Employee Benefits 14,047,250 11,213,750 14,047,250 11,213,750

21,607,250 17,813,750 21,607,250 16,713,750

36. Going Concern


The Company has recorded an accumulated loss amounting to Rs. 216,457,310/- as at 31st March 2017 and its Current

Liabilities exceeded its Current Assets as at 31st March 2017 by Rs. 191,298,263/-. Further, the Company's net assets

are less than half of its stated capital and faces serious loss of capital situation as at the reporting date. Therefore, the

management has taken the following mitigating actions to ensure that the Company will be able to continue as a going

concern.

Improvements to the quality of products, cost minimization by improving the productivity and minimize the wastage,

Introducing new product to the market, improved effective management and a tenders worth of Rs. 217 Mn has been

confirmed in addition to normal sales. The Board expects this subsidiary to turn around by the end of the next financial

year.

Further, Sierra Cables PLC, the parent of the Company has assured to provide necessary financial assistantance and support

as necessary to the Company to manage day to day operations with the intention to continue the business without any

interruption as per the letter of comfort dated 17th August 2017.

37. Financial Risk Management

37.1 Introduction and Overview

The Group has exposure to the following risks from its use of financial instruments:

• Credit Risk

• Liquidity Risk

• Market Risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and

processes for measuring and managing risks, and the Group’s management of capital.

Risk Management Framework

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management

framework. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to

set appropriate risk limits and controls, and to monitor risks and adherence to limits.



105

Sierra Cables PLC

i. Credit Risk

Credit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations, and this principally

arises from the Group’s receivables from customers.

Exposure to Credit Risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at

the reporting date was as follows;

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

Trade Receivables 1,524,292,128 1,090,617,177 1,329,003,994 969,566,099

Amounts due from Related Companies 110,016,242 105,887,739 432,011,951 303,227,360

Balances with Banks 78,771,458 80,234,093 73,481,406 73,005,443

1,713,079,828 1,276,739,009 1,834,497,351 1,345,798,902

Trade Receivables

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The

management has established a credit policy under which each new customer is analysed individually for credit worthiness

before the group standard payment and delivery terms offered.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of Trade

Receivables. The main components of this allowance are a specific loss component that relates to individually significant

exposures, and a collective loss component established for groups of similar assets in respect of losses that have been

incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics

for similar financial assets.

The maximum exposure to credit risk for trade and other receivables is the carrying amounts at the end of the reporting

period, and it is analysed by geographic regions as follows,

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

Local Debtors 1,437,958,257 1,042,375,210 1,246,702,201 921,324,132

Foreign Debtors 86,333,872 48,241,967 82,301,793 48,241,967

1,524,292,129 1,090,617,177 1,329,003,994 969,566,099

Provison for Impairment (135,590,708) (168,115,337) (111,418,566) (148,733,637)

1,388,701,421 922,501,840 1,217,585,428 820,832,462


106

Sierra Cables PLC

ii. Liquidity Risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial

liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to

ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and

stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

As at 31st March 2017

Within 1 year

Rs.

Between1-2 years

Rs.

Between2-5 years

Rs.

More than 5 years

Rs.

Total

Rs.

Group

Non- Derivative Financial Liabilities

Trade and Other Payables 972,584,658 - - - 973,013,971

Borrowings 1,290,933,056 88,905,079 4,750,000 - 1,384,588,134

Bank Overdraft 98,056,157 - - - 98,056,157


Within 1 year

Rs.

Between1-2 years

Rs.

Between2-5 years

Rs.

More than 5 years

Rs.

Total

Rs.

Group



Borrowings 866,995,717 78,688,444 63,574,647 - 1,009,258,808

Bank Overdraft 72,104,387 - - - 72,104,387


Within 1 year

Rs.

Between1-2 years

Rs.

Between2-5 years

Rs.

More than 5 years

Rs.

Total

Rs.

Company



Borrowings 1,114,521,588 51,864,000 4,750,000 - 1,171,135,588


Within 1 year

Rs.

Between1-2 years

Rs.

Between2-5 years

Rs.

More than 5 years

Rs.

Total

Rs.

Company



Borrowings 782,915,668 49,990,821 56,614,000 - 889,520,489



107

Sierra Cables PLC

iii. Market Risk

Market risk is the risk that changes in market prices, such as interest rates, equity prices, foreign exchange rates- will affect

the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to

manage and control market risk exposures within acceptable parameters, while optimizing the return on risk.

(a) Currency Risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than

Sri Lankan Rupees. The foreign currencies in which these transactions primarily denominated are United Stated Dollars

(USD) and Euro.

Exposure to Currency Risk

The summarised quantitative data about the Group’s exposure to currency risk as reported to the Management of the

Group based on its risk management policy was as follows:

Group Company

As at 31st March2017USD

2016USD

2017USD

2016USD

Trade Receivables 584,284 326,180 556,996 326,180

Trade Payables (5,432,146) (1,896,772) (5,339,659) (1,668,644)

Net Statement of Financial Position Exposure (4,847,862) (1,570,592) (4,782,663) (1,342,464)

Exposure to Currency Risk


2016USD

Trade Payables - Foreign Creditors 5,432,146 1,896,772

Gross Statement of Financial Position Exposure 5,432,146 1,896,772

Exchange Rates

Average Rate Reporting Date Spot Rate


2016USD

2017USD

2016USD

USD 147.29 143.90 154.30 147.90


108

Sierra Cables PLC

Sensitivity Analysis

A strengthening of the LKR, as indicated below, against the USD at 31st March 2017 would have increased/ (decreased)

the Equity and Profit or Loss by the amounts shown below. This analysis is based on foreign currency exchange rate

variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes

that all other variables, in particular interest rates, remain constant.

Strengthening Weakening

As at 31st MarchProfit or Loss

Rs.Profit or Loss

Rs.

31st March 2017

USD (10% Movement) (83,818,016) 83,818,016

31st March 2016

USD (10% Movement) (28,053,252) 28,053,252

(b) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument fluctuate because of changes in

market interest rates. The Groups exposure to the risk of changes in market interest rates relates primarily to the Group’s

long term debt obligation .The Group utilises various financial instruments to manage exposures to interest rate risks .

At the reporting date, the Group’s interest-bearing financial instruments were as follows:

Carrying Amount


2016USD

Variable Rate Instruments

Financial Liabilities

Long Term Loans (178,390,323) (247,080,474)

Import Demand Loans (1,206,197,811) (768,178,333)

Bank Overdrafts (98,056,157) (72,104,387)

(1,482,644,291) (1,087,363,194)

Cash Flow Sensitivity Analysis for Variable Rate Instruments

The Group is exposed to changes in market interest rates through bank borrowings at variable interest rates.

Profit or Loss

As at 31st March100 bp Increase

Rs.100 bp Decrease

Rs.

Variable Rate Instruments (14,826,433) 14,826,433

Cash Flow Sensitivity (Net) (14,826,433) 14,826,433



109

Sierra Cables PLC

37.2 Capital Management

The Board’s policy is to maintain a strong capital base so as to maintain share holder, creditor and market confidence and

to sustain future development of the business. The Board of Directors monitors the return on capital and level of dividends

to ordinary shareholders.

The Group’s Net Debt to adjusted Equity ratio at the end of the reporting period was as follows:

Group Company


Rs.2016

Rs.2017

Rs.2016

Rs.

Total Liabilities 2,739,272,553 1,713,388,923 2,322,693,316 1,417,732,727

Less: Cash and Cash Equivalents (78,771,458) (80,234,093) (73,481,406) (73,005,443)

Net Debt 2,660,501,095 1,633,154,830 2,249,211,911 1,344,727,284

Total Equity 1,676,847,404 1,546,612,947 1,708,390,550 1,604,253,813

Net Debt to Equity Ratio 159% 106% 132% 84%

There were no changes in the Group’s approach to Capital Management during the year and the Group is not subject to

externally imposed capital requirements.

38. Fair Value Measurement

The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used

in making the measurements.

Level 1 : Quoted market price (unadjusted) in an active market for an identical instrument.

Level 2 : Valuation techniques based on observable inputs.

Level 3 : Valuation techniques using significant unobservable inputs


110

Sierra Cables PLC


38.1 Financial Instruments carried at Fair Value and Valuation Bases

The table below analyses financial instruments measured at fair value at the end of the reporting period, by the level in the

fair value hierarchy into which the fair value measurement is categorized..

Company

As at 31st March 2017Level 1

Rs.Level 2

Rs.Level 3

Rs.Total

Rs.

Available for Sale Investments 29,142,315 - - 29,142,315

29,142,315 - - 29,142,315

Company

As at 31st March 2016Level 1

Rs.Level 2

Rs.Level 3

Rs.Total

Rs.

Available for Sale Investments 7,722,067 37,033,624 - 44,755,691

7,722,067 37,033,624 - 44,755,691

38.2 Fair Value of Financial Instruments carried at Amortized Cost

The following table summarizes the carrying amounts and the Group’s estimate of fair values of those financial assets and

liabilities not presented on the Group’s Statement of Financial Position at fair value.

2017

Carrying Amount

Rs.Fair Value

Rs.

Assets

Cash and Cash Equivalents 78,771,458 78,771,458

Trade and Other Receivables 1,673,026,253 1,673,026,253

Amounts due from Related Companies 110,016,242 110,016,242

Liabilities

Trade and Other Payables 972,584,658 972,584,658

Interest Bearing Borrowings 1,384,588,134 1,384,588,134

Bank Overdraft 98,056,157 98,056,157


111

Sierra Cables PLC

Cash and Cash Equivalents

The carrying amount of the cash and cash equivalents and balances with banks approximate the fair value as theses are

short term in nature.

Trade and Other Receivables

Trade and other receivables are expected to be settled within one year from the reporting date and hence the discounting

impact would be immaterial. Therefore carrying amount approximate the fair value as at the reporting date.

Trade and Other Payables

Trade and other payables are expected to be settled within one year from the reporting date and hence the discounting

impact would be immaterial. Therefore carrying amount approximate the fair value as at the reporting date.

Interest Bearing Borrowings

Long term borrowings are repriced either monthly, quarterly or semi annually in line with the changes in the market rates

Hence carrying value of these borrowings approximate the fair value Other borrowings are short term in nature and hence

carrying value approximate the fair value.

(viii) Categorization of Financial Assets and Liabilities as at the Reporting Date

Classification Fair Value

Loans and Receivables

Rs.

Other Financial

LiabilitiesRs.

Level 1

Rs.

Level 2

Rs.

Level 3

Rs.

Financial Instrument

Trade and Other Receivables 1,673,026,253 - - - 1,673,026,253

Amount due from Related Parties 110,016,242 - - - 110,016,242

Cash and Cash Equipments 78,771,458 - - 78,771,458 -

Financial liabilities

Trade and Other Payables - 972,584,658 - - 972,584,658

Interest Bearing Borrowings - 1,384,588,134 - - 1,384,588,134

Bank Overdraft - 98,056,157 - - 98,056,157


114

Sierra Cables PLC

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ios

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l Ass

ets/

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ty 1

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1.4

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1.8

9 2

.03

2.0

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.21

2.1

2 2

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over

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0.8

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600.

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630.

761.

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92

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gin(

%)

8.7

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.70

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8 4

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(1.0

8) (1

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6.2

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Retu

rn o

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uity

(%)

10.

13

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.82

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)18

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2.8

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.12


115

Sierra Cables PLC

Quarterly PerformanceIncome Statement

2016 / 17

For the Three Months Ended,30th June

Rs.30th September

Rs.31st December

Rs.31st March

Rs.

Company

Revenue 728,704,242 1,011,033,700 1,002,545,208 982,698,624

Cost of Sales (561,268,154) (754,852,661) (788,117,067) (776,097,660)

Gross Profit 167,436,088 256,181,039 214,428,141 206,600,964

Other Income 725,170 4,334,654 18,329,721 3,512,980

Selling and Distribution Expenses (45,031,457) (62,535,860) (55,020,213) (50,898,098)

Administrative Expenses (21,192,492) (25,656,561) (21,691,204) (86,941,497)

Other Operating Expenses (16,000,000) (14,000,000) (14,000,000) (13,500,000)

Profit/(Loss) from Operations 85,937,309 158,323,272 142,046,445 58,774,349

Net Finance Costs (21,018,259) (28,872,572) (35,649,682) (38,059,757)

Profit/(Loss) Before Taxation 64,919,050 129,450,700 106,396,763 20,714,592

Income Tax Expense (10,000,000) (25,000,000) (25,000,000) (25,755,775)

Profit/(Loss) for the year 54,919,050 104,450,700 81,396,763 (5,041,183)

Statement of Financial Position

2016 / 17

As at,30th June

Rs.30th September

Rs.31st December

Rs.31st March

Rs.

Company

Assets 3,193,933,506 3,479,311,316 3,843,262,173 4,031,083,863

Liabilities 1,537,936,237 1,715,832,624 1,998,771,733 2,322,693,314

Net Assets 1,655,997,269 1,763,478,692 1,844,490,440 1,708,390,549

Stated Capital 894,565,898 894,565,898 894,565,898 894,565,898

Reserves 761,431,371 868,912,794 949,924,542 813,824,651

Stated Capital and Reserves 1,655,997,269 1,763,478,692 1,844,490,440 1,708,390,549


116

Sierra Cables PLC

Notice of MeetingSierra Cables PLCNotice of the 14th Annual General Meeting

NOTICE IS HEREBY GIVEN that the 14th Annual General Meeting of SIERRA CABLES PLC (the Company) will be held on

29th September 2017 at 10.00 a.m. at The Sri Lanka Foundation Institute, 100, Independence Square, Colombo 07.

Agenda

1. To receive and consider the Report of the Directors on the State of Affairs of the Company and the Statement of

Audited Accounts for the year ended 31st March 2017 and the Report of the Auditors thereon.

2. To re-elect Mr. W.A. P.Perera who retire by rotation in accordance with Article 91 of the Articles of Association of

the Company and being eligible, offer himself for re-election.

3. To re-elect Mr. J.H.P. Ratnayeke who retire by rotation in accordance with Article 91 of the Articles of Association

of the Company and being eligible, offer himself for re-election.

4. To re-elect Ms. G. S. M. Irugalbandara who retire by rotation in accordance with Article 91 of the Articles of

Association of the Company and being eligible, offer herself for re-election.

5. To re-appoint Messrs KPMG Ford, Rhodes, Thornton & Co., Chartered Accountants as Auditors of the Company

for the ensuing year and to authorize the Directors to determine their remuneration

BY ORDER OF THE BOARD OF DIRECTORS OF

SIERRA CABLES PLC

P.R. SECRETARIAL SERVICES (PRIVATE) LIMITED

Secretaries

At Colombo, this 11th August 2017

Note:

• A Member entitled to attend and vote at the meeting, is entitled to appoint a Proxy to attend and vote instead

of him/her.

• A Proxy need not be a Member of the Company.

• A Member wishing to vote by Proxy at the meeting may use the Form of Proxy form enclosed.

• Any member or Proxy holder attending the meeting is kindly requested to bring this report.

• The completed Form of Proxy should also be deposited at the Registrars of the Company, SSP Corporate

Services (Private) Limited,101, Inner Flower Road, Colombo 03 not less than forty eight (48) hours before the

time appointed for holding of the meeting.

• For security reasons, Members. Proxy holders are kindly advised to bring along with them their National Identity

Card or similar for of acceptance identity when attending the meeting.


117

Sierra Cables PLC

Form of ProxySierra cables plcI/We……………………………………………………………………………………………………………………………….of…

……………………………………………………………………………………being a Member/Member* of the above named

Company, hereby appoint (1)……………………………………………………….of………………………………………………

………………………………………………..failing him/her.

(2) Mr. W. A. P. Perera, or failing him (3) Mr. D. S. Panditha, or failing him

(4) Ms. G. S. M. Irugalbandara, or failing her (5) Mr. J. H. P. Ratnayeke, or failing him

(6) Mr. E.A.D.T.B. Perera, or failing him (7) Prof. A. K. W. Jayawardane, or failing him

(8) Eng. B. W. N. Rupasinghe, or failing him (9) Mr. M. N. Gunasekara, or failing him

(10) Ms. S. N. Lokuge or failing her

as my/our* Proxy to represent me/us* and vote and speak for me/us* on my/our* behalf at the 14th Annual General

Meeting of the Company to be held on 29th September 2017 at 10.00 a.m. at The Sri Lanka Foundation Institute, 100,

Independence Square, Colombo 07 and at ever poll which may be taken in consequence of the aforesaid meeting and at

any adjournment thereof.

I/We Indicate My/Our Vote On The Resolutions Below As Follows;

1. To receive and consider the Audited Financial Statements for the year ended 31st

March 2017 and the Report of the Auditors thereon.

2. To re-elect Mr. W.A.P.Perera who retire by rotation in accordance with Article 91

of the Articles of Association of the Company and being eligible, offer himself for

re-election.

3. To re-elect Mr.J.H.P.Ratnayeke who retire by rotation in accordance with Article 91

of the Articles of Association of the Company and being eligible, offer himself for

re-election.

4. To re-elect Ms. G. S. M. Irugalbandara who retire by rotation in accordance with

Article 91 of the Articles of Association of the Company and being eligible, offer

herself for re-election.

5. To re-appoint Messrs KPMG Ford, Rhodes, Thornton & Co., Chartered Accountants

as Auditors of the Company for the ensuing year and to authorize the Directors to

determine their remuneration

Signed this ……………day of…………………………..2017.

……………………………………

Signature of shareholder

AgainstFor


118

Sierra Cables PLC

Instructions For The Completion Of Proxy

1. Please perfect the form of Proxy after filling in legibly your full name and address and by

signing in the space provided and fill-in the date of signature.

2. Please return the completed form to the Company after deletion of one or other of the

alternate words indicated by asterisks in the body of the form.

3. The completed form of Proxy should be deposited at the Office of the Company

Secretaries at SSP Corporate Services (Private) Limited at No.101, Inner Flower Road,

Colombo 3 not less than 48 hours before the time appointed for the holding of the

meeting.

4. If the Proxy has been signed by an Attorney, the relative Power of Attorney should

accompany the completed Proxy for registration, if such Power of Attorney had not

been registered with the Company.

5. In the case of a Company/Corporation, the Proxy must be under its Common Seal which

should be affixed and attested in the manner prescribed by its Articles of Association/Act

of Incorporation.


119

Sierra Cables PLC

Corporate InformationName of the Company

Sierra Cables PLC

Company Re-registration No.

PQ 166(under Companies Act No.07 of 2007)

Registered Office

112, Havelock Road, Colombo 05

Company Secretaries

P.R. Secretarial Services (Private) Limited 59, Gregory’s

Road Colombe 07.

Tel : 0112671439,0112671441

Email : [email protected]

Auditors

KPMG, (Chartered Accountants) 32 A, Sir Mohomed

Macan Marker Mawatha,

P.O. Box 186,Colombe 03.

Tel: 0115426426 Fax: 0112445872

E-mail: frt@kpmgJk

Legal Advisors

Paul Rat:hnayake Associates

59, Gregory’s Road Colombe 07.

Tel: 0112697893, 0112697894

Email: [email protected]

Bankers

Commercial Bank of Ceylon PLC Sampath Bank PLC

Bank of Ceylon

People’s Bank

Subsidiary Companies

Sierra Industries (Private) Limited Sierra Power (Private)

Umited Sierra Cables East Ahica Limited

Associate Companies

T & GLanka (Private) Limited

Tea Leaf Resorts (Private) Umited

Domicile and Legal Form

Sierra Cables PLC is a limited liability Company

incorporated and domiciled in Sri Lanka.

The Registered office of the Company is at 112,Havelok

Road, Colombo 05 and principle place of business is

located at 39/1A, Galvarusa Road, Korathota, kaduwela.

Tel : 0114412000-4

Fax : 0112770291, 0114412573

E-mail : [email protected]

Web : www.sierracables.com

Issued Ordinary shares of the Company is stated as listed

on the Colombo Sock Exchange since 22”6 November

2005.

Principal Activities and Nature of Operations

The principal activity of the Company is manufacturing

and sales of wires and cables.

Parent Enterprises and Ultimate Parent Enterprise

In the Directors opinion, the company’s ultimate parent

undertaking and controlling party is Sierra Holdings

(Private) Limited which is incorporated in Sri Lanka.

Number of Employees

The number of employees of the Group at the end of the

year was 282 (2014/15 - 306).


120

Sierra Cables PLC